ANNUAL REPORT 2018
BOART LONGYEAR 2018 ANNUAL REPORT CONTENTS
2018 Overview
Chairman’s Report
CEO’s Report
Financial Report
Directors’ Report
Review of Operations
Remuneration Report
Board of Directors
Executive Management Team
Independent Auditor’s Report
Directors’ Declaration
Financial Statements
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II
IV
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41
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Supplementary Information
Corporate Information
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BC
CORPORATE GOVERNANCE STATEMENT
Our Corporate Governance Statement may be found
at www.boartlongyear.com/corporate-governance
WHO WE ARE
Established in 1890, Boart
Longyear is the world’s leading
provider of drilling services,
drilling equipment and
performance tooling for mining
and drilling companies. It also
has a substantial presence in
aftermarket parts and service,
energy, mine de-watering, oil
sands exploration, production
drilling, and down-hole
instrumentation.
The Global Drilling Services division
operates for a diverse mining customer
base spanning a wide range of
commodities, including copper, gold,
nickel, zinc, uranium, and other metals
and minerals.
The Global Products division designs,
manufactures and sells drilling
equipment, performance tooling,
down-hole instrumentation and parts
and services.
Our customers rely on our unique
ability to develop, field test and deliver
any combination of drilling consumables,
capital equipment and expertise
worldwide.
*EBITDA, Adjusted EBITDA and Adjusted EBIT
are non IFRS measures and are used internally
by management to assess the performance of the
business.
Cash from Operations excludes interest and tax.
BOART LONGYEAR 2018 ANNUAL REPORT
BOART LONGYEAR 2018 ANNUAL REPORT
Copyright © 2019 Boart Longyear. All rights reserved.
2018 OVERVIEW
2018 OVERVIEW
2018 2017 2016
Revenue
US$770m
Adjusted Gross Margin
US$142m
Adjusted EBITDA
US$81m
Gross Margin US$131m
EBITDA US$54m
Net Profit After Tax
US$-44m
770
739
642
131
113
111
142
86
89
54
81
-44
-37
43
2
32
-150
-157
Cash from Operations
US$24m
Number of Employees
4,637
Safety
TCIR 1.90
Safety
LTIR 0.10
-40
24
-1
4,637
4,604
4,337
1.90
1.62
1.41
0.10
0.11
0.22
Drilling Services
Revenue
US$534m
Drilling Services
EBITDA
US$83m
Products
Revenue
US$237m
Products
EBITDA
US$31m
534
501
448
83
69
52
237
239
195
31
11
13
Company Revenue
(Products and Services)
Company Revenue
by Region (Products
and Services)
Drilling Services
Revenue by Stage
Drilling Services
Revenue by Commodity
Surface Coring
Performance Tooling
Rotary/RC
Underground Coring
Drilling Equipment
Production Drilling
Other
30%
23%
18%
15%
7%
4%
3%
USA
Asia Pacific
Canada
EMEA
Latin America
27%
22%
19%
18%
14%
Development
(Near Mine/Brownfield)
Production (In-Pit)
59%
21%
Exploration (Greenfield)
13%
Non-Mining
7%
Gold
Copper
Non-Mining Water
Nickel
Energy
Other Metals
Iron
Other
53%
21%
7%
5%
5%
4%
3%
2%
BOART LONGYEAR 2018 ANNUAL REPORT
I
Dear Shareholders,
Your Board is pleased to share with you Boart Longyear’s
financial results for 2018. The company’s profitability increased
by 87% over 2017 and Jeff Olsen, Boart Longyear’s CEO, will
fill you in on the details in his report.
2018 began with great promise with prices for gold, copper,
and iron ore increasing and giving a renewed confidence
in the mining industry. However, the second half of the year
saw the increase in global trade instability including the
introduction of new tariffs, and a general increase in the cost
of raw materials.
Despite the uncertainty created by tariffs, our expectation
is that the short- and medium-term business environment
is going to be good for Boart Longyear. A five-year deficit in
drilling left mining companies with insufficient reserves. This
played a major factor in the recent round of gold company
mergers. Mining balance sheets are also in good shape,
with companies looking for places to put cash.
This bodes well for the exploration business
generally and Boart Longyear in
particular.
The overhang that Boart Longyear
has had for more than five years is
high debt levels. Uncertainty about
our ability to pay back these debts,
or the potential for dilutive equity
offerings, have been detrimental to
our share price.
As we face the next few years,
the combination of a good
exploration environment and the
strong improvement in results that
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The good results we achieved this year were
helped by stability in both management and the
board. I continue to work with an experienced and
excellent board of directors including Jeff Olsen
(CEO), Kyle Cruz, Jason Ireland, James Kern,
Gretchen McClain, Rob Smith, Richard Wallman,
and Eric Waxman, and a strong Boart Longyear
management team who are all committed to
increasing value in your investment.
Yours sincerely,
Marcus Randolph
Chairman
management is delivering, provides a path to
address our debt. We are now cash positive and
both our revenues and our margins are steadily
improving. As these results, and the ones to come,
show that we will have the liquidity to strengthen
our balance sheet, this should flow through to a
strengthening market of our share price.
We have also had good news on the technology
front. For several years we have talked about
Geologic Data Services (“GDS”) providing an
ability to expand our business by delivering
valuable data (assays, logging, orientation, etc).
We have introduced several tools which have
been well accepted by our customers, including
a true “superstar” product – TruScan™. This tool
provides immediate, on-site assay of drill core and
is progressively moving into assaying chips from
production drill holes. This is a new business for
us, and we now have 12 TruScan units built and
operational. Demand is high, the business is high
margin, and we are adding more TruScan units as
fast as we can. Our expectation is that the GDS
results will start to materially impact financial
results in the next 12-18 months.
BOART LONGYEAR 2018 ANNUAL REPORT
III
Dear Shareholders,
I’m pleased to report to you on our 2018 full-year
results. Our management team and employees
are proud of our significantly improved financial
and operating performance during 2018.
To highlight some of our achievements, I’d like to
start first with safety. In 2018, we had the fewest
number of lost time incidents for the company,
resulting in a Lost-Time Incident Rate (LTIR) of
0.10 per 200,000 man work hours. This is really
world class and is a factor often considered by
mining companies when they choose service
providers, so our safe track record continues to
open doors.
Increased volume coupled with improving our
operating performance and continued focus
on cost-saving initiatives have resulted in
significantly increased profitability. Profitability
(adjusted EBITDA) improved by US$38 million,
which was an increase of 87% over 2017, and
made for stronger volumes up 12.5% (adjusted
for exited countries). Operating cash flow
improved tremendously and was up US$58
million. Global exploration budgets still remain
below 2014 levels, giving good reason to believe
in continued improvement in the market.
We are focused on operating efficiencies, with
labor costs decreasing 2% as a percentage of
revenue, despite increasing wages. We were also
able to reduce inventory more than 5% and our
global facility footprint decreased by 30%. While
we will continue to watch cash, it is evident that
the hard work is paying off.
Watching the leading indicators in our industry,
we continue to see gold as the commodity
which drives approximately 50% of investment
in exploration activities.* Recent news of large
mergers and acquisitions in the gold sector
continue to open up drilling opportunities as
these companies look to improve the value of
their investments and replenish reserves. Copper
is improving, and so are most of the base metals
commodities, representing opportunities for Boart
Longyear to both provide expert services and
state-of-the-art products.
Although we are recognised as an industry
leader, we know we need to continue innovating
in a changing market. With an eye keenly
focused on exploration potential, Boart Longyear
continued to invest in advanced drilling
techniques in 2018. As a priority we are providing
new products and services that deliver time-
sensitive and critical geological information to
assist mining companies with their exploration
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decisions. Our Geological Data Services (GDS)
technologies, which include TruCore™, TruShot™,
and TruScan™, were rolled out to more locations
with wider acceptance in 2018 and enabled
revenues to double over the year.
We have also seen more product sales success
in 2018, since introducing the full-line of
Longyear™ diamond coring bits. Reports of
successful field experiences from our own drilling
services teams and customers helped drive
Longyear bit sales up 70% in 2018.
Our executive team, board, and employees are
are committed to keeping the momentum going
for 2019 by taking advantage of the growth
potential in exploration. The results were good
for 2018, but we still have a ways to go. We
have redefined our Company’s strategy to be
the drilling partner who builds our customers’
orebody knowledge, while continuing to be
the best global drilling services and drilling
products company. This all adds up to
delivering more value to our customers
and to our shareholders.
Yours sincerely,
Jeff Olsen
President and CEO
*Source: S&P Global Market Intelligence Report,
as of January 31, 2019
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BOART LONGYEAR LIMITED
A.B.N. 49 123 052 728
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2018
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BOART LONGYEAR 2018 ANNUAL REPORT
BOART LONGYEAR 2018 ANNUAL REPORT
CONTENTS
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
REMUNERATION REPORT
BOARD OF DIRECTORS
EXECUTIVE MANAGEMENT TEAM
AUDITOR’S INDEPENDENCE DECLARATION
INDEPENDENT AUDITOR’S REPORT
DIRECTORS’ DECLARATION
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
3
5
19
33
37
38
41
46
47
48
49
50
52
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BOART LONGYEAR 2018 ANNUAL REPORT
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BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
BOART LONGYEAR LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Boart Longyear Limited (the “Parent”) and its controlled
entities (collectively the “Company”) for the financial year ended 31 December 2018 (the “financial year”) and the Independent
Auditor’s Report thereon.
Financial results and information contained herein are presented in United States (“US”) dollars unless otherwise noted.
DIRECTORS
The Directors of the Company (the “Directors”) in office during the financial year and as at the date of this report are set out
below.
Directors
Position
Marcus Randolph
Executive Chairman
Kyle Cruz
Non-executive Director
Jason Ireland
Non-executive Director
James Kern1
Non-executive Director (appointed effective 20 February 2018)
Gretchen McClain
Non-executive Director
Jeffrey Olsen
Executive Director
Robert Smith
Non-executive Director
Richard Wallman
Non-executive Director
Eric Waxman
Non-executive Director
For a summary of experience and qualifications for each Director, see the Board of Directors section on page 33 of this
Report.
COMPANY SECRETARIES
Robert Closner
Philip Mackey
PRINCIPAL ACTIVITIES
Boart Longyear is the global leading integrated provider of drilling services, drilling equipment and performance tooling for
mining and mineral drilling companies. The Company offers a comprehensive portfolio of technologically advanced and
innovative drilling services and products. The Company operates through two divisions -- “Global Drilling Services” and
“Global Products” -- and believes that its market-leading positions in the mineral drilling industry are driven by a variety of
factors, including the performance, expertise, reliability and high safety standards of Global Drilling Services, the technological
innovation, engineering excellence and global manufacturing capabilities of Global Products and the Company’s vertically
integrated business model. These factors, combined with the Company’s global footprint, have allowed the Company to
establish and maintain long-standing relationships with a diverse and blue-chip customer base worldwide that includes many
of the world’s leading mining companies. With more than 129 years of drilling expertise, the Company believes its
insignia
and brand represent the gold standard in the global mineral drilling industry.
(1)
James Kern served as an alternate, non-executive director on behalf of Lawrence First from 29 September 2017 to 20 February 2018 at
which time Mr. First resigned from the Board and Mr. Kern was appointed to fill the vacated Board position.
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BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the second half of 2018 the Company completed a transaction to increase its position to a majority stake (51.7%) in
Globaltech Corporation Pty Ltd. Boart Longyear and acted on its rights to convert debt to equity to increase the total ownership
position.
The continued investment in Globaltech builds upon the in-house knowledge tied to electronic instrumentation and data
collection in the mineral exploration and mining industry. This is an intentional decision to further support the Company’s
Geological Data Services strategy that is fully focused on developing digital technologies and services and delivering
resource-defining information for mining clients.
EVENTS SUBSEQUENT TO REPORTING DATE
No subsequent events.
DIVIDENDS
No dividends have been paid during the financial year.
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Boart Longyear Limited Annual Report 2018
REVIEW OF OPERATIONS 1
1. Safety Performance, Market Conditions and Strategies
1.1 Overview
Boart Longyear is the world’s leading integrated provider of drilling services, drilling equipment and performance tooling for
mining and mineral drilling companies globally. We conduct our business activities through two segments, Global Drilling
Services and Global Products.
We aim to create value for our customers through a comprehensive portfolio of technologically advanced and innovative
drilling services and products. We believe that our market leading positions in the mineral drilling industry are driven by a
variety of factors, including the performance, expertise and high safety standards of Global Drilling Services and the
innovation, engineering excellence and global manufacturing capabilities of Global Products.
Our operating and commercial priorities include solidifying our competitive advantages with sustained investments in safety
performance, productivity enhancements and operating improvements in our Global Drilling Services division, while remaining
focused on the needs of our customer base. Similarly, technology and product innovation are central to the strength and
future growth of our Global Products division, and we continue to pursue incremental product improvements that customers
will need at any point in the mining cycle. Our successes include the LF160 surface coring drill paired with our Freedom
Loader which has set a new benchmark in productivity and hands-free rod handling. Launched in the second half of 2017, our
patented Longyear™ coloured diamond bits continue to show improved productivity by lasting longer and cutting
faster. Commercial launch of the new XQ™ coring rod continues globally, featuring a greater depth capacity than the RQ™
rod, and faster, easier joint make/breaks for higher productivity. TruCore™ core orientation tools continue to expand
geographically and are available globally. The TruShot™ magnetic survey instrument, the second in a future suite of tools,
was launched in the first half of 2018 and we are now using our TruScanTM geological sample field screening technology at
mine sites with several mining customers. These instruments are part of our strategy to be the global technology leader in
providing subsurface resource information to mining companies through our Geological Data Services business.
Our capital structure exposes us to a variety of market, operational and liquidity risks. As at 31 December 2018 cash flows
from operating activities was $3.7 million. This represents an improvement of $57.7 million over 2017 cash flows from
operating activities of negative $54.0 million. This significant improvement was achieved through continued discipline on cost
control and capital management, focused cost reductions, productivity enhancements and working capital management.
1.2 Safety Performance
Boart Longyear strives to continuously improve safety performance each year. The Company is driving culture and
consistency across the globe though new systems and programs designed to focus on the Company’s critical risks, the
simplification of field standards, and through system based critical control verification audits.
For the year ending 31 December 2018, the Company performance on key indicators includes a Total Case Incident Rate
(TCIR) of 1.90 and Lost Time Injury Rate (LTIR) of 0.10, compared to corresponding rates of 1.62 and 0.22 in 2017. Both
TCIR and LTIR are rates calculated based on 200,000 hours worked. During this period, our employees experienced 5
injuries resulting in lost work time, the lowest number of lost time injuries in the past 12 years. The Company’s TCIR increase
from 2018 reflects, in part, the increase in exposure in drilling services activity and the deployment of increasing numbers of
new employees into the operations. The majority of recordable injuries are low severity, including muscle pulls, muscle strains,
and abrasions.
The continued improvements made this year are primarily due to the focus shift from lagging indicators to proactive leading
indicator programs. Boart Longyear’s key leading indicator programs focused on management interactions and hazard
identification, new and existing employee training, non-conformance corrective action monitoring, and vehicle driver
performance – monitored with a fleet of In-Vehicle Monitoring Systems (IVMS). The 2019 KPI programs now includes Critical
Risk Management. These programs are measured and reviewed monthly by Boart Longyear’s Executive Committee who drive
overall performance. These systems reflect our ongoing priority to identify and mitigate significant and critical risks.
(1) The Review of Operations contains information sourced from our audited financial statements as well as additional supplemental
information that has not been subject to audit or review.
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Boart Longyear Limited Annual Report 2018
1.3 Impact of Market Conditions
Market conditions in 2018 have continued to improve with the mining companies looking for opportunities to invest to replenish
their depleted ore reserves. Mining companies continue to project increasing exploration and drilling activity over the coming
periods however we do see them continue to tightly control their exploration, development and capital expenditures.
During 2018, drill rig utilisation improved slightly across the global operations. The Company continues to improve on terms
and conditions in each contract as they mature. Increasing demand for our goods and services has allowed the Company to
make small improvements on pricing conditions.
We added new exploration drill rigs to the drilling services fleet around the world to meet the demand of expanding exploration
budgets and we continue to evaluate opportunities where we can help our customers meet their exploration goals, utilising the
latest technology improvements that support both safety and productivity enhancements.
As a result of improving market conditions and continued focus on cost control and productivity improvements, the Company
reported a statutory loss for the period ended 31 December 2018 of $43.5 million, which was a significant improvement over
the prior year (2017: $150.0 million loss).
Objectives and Strategies
In addition to our prime goal of returning our employees home safely each day, we continue to position the business to operate
more efficiently across all phases of the mining cycle. Key elements of this strategy include focusing more closely on cash
generation, achieving and maintaining sustainable EBITDA-to-revenue margins, improving returns on capital through
disciplined variable and fixed cost management and capital spending programs, and maintaining a rigorous focus on working
capital, particularly inventory and accounts receivable.
We are committed to driving long-term shareholder value by executing on several initiatives to improve our commercial
practices in both our divisions and safety, productivity and profitability in our Global Drilling Services division, including
through:
1.
2.
3.
4.
focusing on operational efficiencies and productivity at the drill rig level;
optimising the commercial organisation to drive value through contracting and pricing processes;
leveraging the supply chain function across the business; and
controlling SG&A and other overhead related costs.
We are also pursuing market leadership in providing subsurface resource information to our mining customers in an
integrated, real-time and cost-effective manner through our Geological Data Services business.
Ultimately, our goal is to help our customers build their ore body knowledge. Through our focus on operational excellence, we
will address the risks and challenges of the mining industry cycle while also preserving the significant upside that we may
realise in our operations as market conditions improve, combined with a significantly improved cost structure and operating
performance. We are also capitalising on longer-term growth opportunities through investment in technologies that will
broaden our customer offerings.
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Boart Longyear Limited Annual Report 2018
2 Financial and Operating Highlights
For the year ended 31 December
2018
2017
US$ Millions
US$ Millions
$ Change
% Change
Key financial data
Revenue
NPAT(1)
EBITDA(2)
Adjusted EBITDA(2)
Operating profit (loss)
Profit (loss) from Trading Activities (3)
Cash generated (used) in operations
Net cash flows generated (used) in operating activities
Capital expenditures (accrual)
Capital expenditures (cash)
770.2
(43.5)
54.1
80.6
17.6
54.8
24.1
3.7
40.9
39.1
739.1
(150.0)
(36.6)
43.1
(87.7)
10.0
(40.4)
(54.0)
30.4
28.4
31.1
106.5
90.7
37.5
105.3
44.8
64.5
57.7
10.5
10.7
Weighted Average number of ordinary shares
26,290.8
9,225.9
Earnings per share (basic and diluted)
(0.2) cents
(1.6) cents
17,064.9
1.4 cents
Average BLY rig utilisation
Average Fleet size
46%
676
43%
720
3%
(44)
4.2%
71.0%
247.8%
87.0%
120.1%
448.0%
159.7%
106.9%
34.5%
37.7%
185.0%
98.9%
7.0%
-6.1%
(1) NPAT is 'Net profit after tax'.
(2) EBITDA is 'Earnings before interest, tax, depreciation and amortisation'. Adjusted EBITDA is 'Earnings before interest, tax, depreciation
and amortisation and before significant and other non-recurring items'. See reconciliation in section 3.3 'Significant Items'.
(3) Profit/(Loss) from Trading Activities is a non-IFRS measure and is used internally by management to assess the underlying performance
of the business and has been derived from the Company’s financial results by eliminating from Operating Loss charges relating to
significant and other expense/income items.
3 Discussion and Analysis of Operational Results and the Income Statement
3.1 Revenue
Revenue for the year ended 31 December 2018 of $770.2 million increased by 4.2%, or $31.1 million, compared to revenue
for the prior year ended 31 December 2017 of $739.1 million.
A majority of the revenue for both Global Drilling Services and Global Products is derived from providing drilling services and
products to the mining industry and is dependent on mineral exploration, development and production activities.
Revenue during 2018, was higher as a result of higher volumes due to strengthening sentiment in the mining industry,
resulting in improved spending on exploration and development when compared to the same period in 2017.
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Boart Longyear Limited Annual Report 2018
3.2 Cost of Goods Sold, Sales and Marketing Expense, and General and Administrative Expense
The following pro forma income statement shows the effects of removing significant items from their respective income
statement line. The adjusted balances will be used in the following narrative to reflect cost categories after removing the
impact of significant items.
For the year ended 31 December
2018
As Reported
Significant
Items
Adjusted
Balance
As Reported
2017
Significant
Items
Adjusted
Balance
Continuing operations
Revenue
Cost of goods sold
Gross margin
Other income
General and administrative expenses
Sales and marketing expenses
Significant items
Other expenses
Operating profit (loss)
770.2
(639.1)
131.1
10.4
(80.6)
(22.1)
-
(21.2)
17.6
-
11.2
11.2
-
14.5
0.8
(26.5)
-
-
770.2
(627.9)
142.3
10.4
(66.1)
(21.3)
(26.5)
(21.2)
17.6
739.1
(628.5)
110.6
6.6
(152.9)
(27.4)
-
(24.7)
(87.8)
-
2.7
2.7
-
76.5
0.5
(79.7)
-
-
739.1
(625.8)
113.3
6.6
(76.4)
(26.9)
(79.7)
(24.7)
(87.8)
Gross margin in 2018 improved to 18.5% compared to 15.3% in 2017. The higher margin is related to cost savings from key
improvement initiatives as well as improved margins on fixed costs relative to stronger sales volumes.
The total of other income, general and administrative expenses (“G&A”), sales and marketing expenses (“S&M”) and other
expenses (adjusted for significant items) of $98.2 million in 2018 was 19.0% less than 2017 of $121.3 million. The lower cost
structure is driven by lower G&A and sales and marketing expenses as a result of continued emphasis on cost savings and
delivery of key value initiatives.
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Boart Longyear Limited Annual Report 2018
3.3 Significant Items
During the years ended 31 December 2018 and 2017, the Company incurred the following restructuring expense,
recapitalisation costs and impairment charges:
US$ Millions
EBITDA(1)
Recapitalisation costs
Impairments
Property, plant and equipment
Inventories
Employee and related costs
Other restructuring expenses
Other non-recurring items
Tax effect of significant items
Total of significant and non-recurring items
Adjusted EBITDA(1)
For the year ended 31 December
2018
2017
US$ Millions
US$ Millions
54.1
-
0.1
10.9
2.6
12.9
-
-
26.5
80.6
(36.6)
50.5
0.1
-
15.1
14.0
-
-
79.7
43.1
(1) EBITDA is 'Earnings before interest, tax, depreciation and amortisation'. Adjusted EBITDA is 'Earnings before interest, tax,
depreciation and amortisation and before significant and other non-recurring items'.
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Boart Longyear Limited Annual Report 2018
4 Discussion and Analysis of Cash Flow
Cash provided by (used in) operations
Net cash flows provided by (used in) operating activities
Net cash flows used in investing activities
Net cash flows provided by financing activities
4.1 Cash Flow used in Operating Activities
For the year ended 31 December
2018
2017
US$ Millions US$ Millions
$ Change
% Change
24.1
3.7
(25.4)
11.6
(40.4)
(54.0)
(15.4)
46.4
64.5
57.7
(10.0)
(34.8)
159.7%
106.9%
-64.9%
-75.0%
Cash flow from operating activities for the year ended 31 December 2018 was $3.7 million, which is an improvement of $57.7
million compared to 2017 of negative $54.0 million. The primary reason for the improvement is related to cash generated from
higher EBITDA.
We have invested $32.5 million in capital equipment and research and development to support existing operations during
2018, which is higher than the comparable prior period (2017: $25.5 million). Of the 2018 amount, approximately $24.8 million
was spent on sustainment activities relating to refurbishing current rigs and other support equipment, $0.6 million was spent on
product development activities, including engineering and patent maintenance, and $7.1 million was invested in Globaltech
research and development following our acquisition of the company. The 2018 capital expenditures have been partially offset
by proceeds from the sale of property, plant and equipment of $13.7 million (2017: $13.8 million).
The decrease in cash flows provided by financing activities is primarily due to generating higher operating cash flows.
5 Discussion of the Balance Sheet
The net liabilities of the Company increased by $55.9 million, to negative $314.9 million as at 31 December 2018, compared to
negative $259.0 million as at 31 December 2017. This increase results primarily from higher long-term debt arising from
accrued interest, partially offset by lower accounts payable.
Total assets of $637.2 million were $35.9 million lower than 2017 of $673.1 million primarily as a result of lower accounts
receivable and inventory as continued emphasis was placed on improving working capital metrics.
Total liabilities increased by $19.9 million to $952.0 million compared to $932.1 million in 2017. This is primarily driven by
accreted interest for the period, partly offset by lower current tax liabilities as a result of the partial resolution of the Canada
Revenue Agency reassessments for the tax years 2007-2012.
__________________________________________________________________________________________
10
BOART LONGYEAR 2018 ANNUAL REPORT
10
Boart Longyear Limited Annual Report 2018
Liquidity and Debt Facilities
The Company’s debt is comprised of the following instruments:
Description
Principal
Outstanding
as at 31
December
2018
(millions)
Accreted
Interest
as at 31
December
2018
(millions)
Interest
Rate
Scheduled
Maturity
Security
Senior Secured Notes
$217.0
$36.6
12%2
December
2022
Second lien on the accounts receivable,
inventories, deposit accounts and cash
(“Working Capital Assets”) of the Term Loan B
and Senior Secured Notes guarantors that are
not ABL or Backstop ABL guarantors, a third lien
on the Working Capital Assets of the Term Loan
B and Senior Secured Notes issuer and the other
Term Loan B and Senior Secured Notes
guarantors that are also ABL or Backstop ABL
guarantors, and a first lien on substantially all of
the other tangible and intangible assets (“Non-
Working Capital Assets”) of the Term Loan B and
Senior Secured Notes issuer and other
guarantors, including equipment, intellectual
property, the capital stock of subsidiaries and
certain owned real property (in any case,
excluding assets of BLY IP, Inc.)
Term Loan – Tranche B
$159.9
Nil
10%3
December
2022
Same as Senior Secured Notes
ABL
$30.0 1
Nil
Variable4
23 July
2020
Term Loan – Tranche A
$132.6
Nil
10%3
December
2022
First lien on the Working Capital Assets of the
ABL borrower and guarantors and a third lien on
substantially all of the Non-Working Capital
Assets of the ABL borrower and guarantors,
including equipment, intellectual property and the
capital stock of subsidiaries (but excluding real
property), and in any case excluding assets of
BLY IP, Inc., Boart Longyear Suisse Sarl and
Boart Longyear S.A.C.
First lien on the Working Capital Assets of the
Term Loan A guarantors that are not ABL or
Backstop ABL guarantors, a second lien on the
Working Capital Assets of the Term Loan A
issuer and the other Term Loan A guarantors
that are also ABL and Backstop ABL guarantors,
and a second lien on substantially all of the Non-
Working Capital Assets of the Term Loan A
issuer and guarantors, including equipment,
intellectual property, the capital stock of
subsidiaries and certain owned real property (in
any case, excluding assets of BLY IP, Inc.)
Backstop ABL
$45.0
$6.7
11%5
23 October
20205
Same as ABL but including any real property
required to be pledged as security for the Senior
Secured Notes
Senior Unsecured
Notes
$88.9
$1.8
1.5%6
December
2022
Unsecured
(1) $5.9 million in letters of credit were issued in addition to the $30.0 million borrowings that were outstanding.
(2)
Interest rate payable-in kind at an interest rate of 12% per annum at the Company’s election until December 2018 and thereafter in
cash at a reduced interest rate of 10% per annum.
Interest is 10% payable-in-kind through December 2018 and 8% payable in-kind thereafter.
(3)
(4) Based on LIBOR + margin (grid-based margin is currently 3.25%).
(5)
Interest is payable-in-kind at 11% at Company’s election or 10% Cash. Maturity Date is 23 October 2020 or 90 days after the ABL
due date.
Interest is 1.5% payable-in-kind at Company’s election until maturity.
(6)
__________________________________________________________________________________________
11
11
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
6
Review of Segment Operations
The following table shows our third party revenue and revenue from inter-segment sales by our Global Drilling Services
division. Segment profit represents earnings before interest and taxes.
2018
US$ Millions
Segment Revenue
2017
Segment Profit
2018
2017
US$ Millions
US$ Millions
US$ Millions
Global Drilling Services
533.6
500.6
57.1
36.4
Global Products revenue
Products third party revenue
Products inter-segment revenue (1)
Total Global Products
Less Global Product sales to Global Drilling Services
Total third party revenue
Total segment profit
236.6
56.0
238.5
54.5
292.6
(56.0)
770.2
293.0
23.5
2.8
(54.5)
739.1
80.6
39.2
(1) Transactions between segments are carried out at arm’s length and are eliminated on consolidation.
__________________________________________________________________________________________
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BOART LONGYEAR 2018 ANNUAL REPORT
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Boart Longyear Limited Annual Report 2018
6.1 Review of Segment Operations - Global Drilling Services
For the year ended 31 December
2018
2017
US$ Millions
US$ Millions
$ Change
% Change
533.6
500.6
33.0
6.6%
423.9
23.6
447.5
83.9%
77.6
14.5%
8.6
17.3
82.9
27.9
310
676
3,406
398.4
30.2
428.6
85.6%
62.8
12.5%
9.3
21.1
69.1
20.8
308
720
3,320
25.5
(6.6)
18.9
-1.7%
14.8
2.0%
(0.7)
(3.8)
13.8
7.1
2
(44)
86
6.4%
-21.9%
4.4%
-2.0%
23.6%
16.0%
-7.5%
-18.0%
20.0%
34.1%
0.6%
-6.1%
2.6%
Financial Information
Third party revenue
COGS
Materials/labor/overhead/other
Depreciation and amortisation
Total COGS
COGS as a % of Revenue
Contribution margin $
Contribution margin %
Business unit SG&A
Allocated SG&A
EBITDA
Capital spend (accrual)
Other Metrics
Average # of Operating Drill Rigs
Average # of Drill rigs
# of Employees at period-end
Safety
The Global Drilling Services division’s Total Case Incident Rate (TCIR) for 2018 was 2.04, compared to 1.96 for the
comparable period in 2017. The Lost-Time Incident Rate (LTIR) for 2018 was 0.09, compared to 0.28 for the comparable
period in 2017. We continue to push our key safety initiatives, which include better analysis of high-potential near miss
incidents and significant injuries; applying corrective actions more globally; increasing management safety interactions at
operating locations; increasing supervisory competencies through training; reinforcing hazard assessments; and increasing
drill rig inspection frequency.
Revenue
Global Drilling Services’ revenue in 2018 was $533.6 million, up 6.6% from $500.6 million in 2017. The revenue increase was
driven primarily by volume, but price did play a role in the increase. Volume increases were driven by Surface Coring and
Underground Coring work in the Australia, EMEA, and LAM. Price increases are averaging approximately 1.9% as a
percentage of year-over-year revenue.
Approximately 88% of Global Drilling Services’ revenue for 2018 was derived from major mining companies, including Barrick,
BHP, Freeport-McMoRan, Goldcorp, Newmont and Rio Tinto. Our top 10 Global Drilling Services customers represented
approximately 65% of the division’s revenue for the first half of 2018, with no single contract contributing more than 10% of our
consolidated revenue.
Margins
With Revenues increasing from $500.6 million in 2017 to $533.6 million in 2018, a 6.6% increase, Global Drilling Services also
achieved an increase in Contribution Margin. The 2018 Contribution Margin was $77.6 million compared to $62.8 million in
2017, an increase of 23.6%. Throughout 2018 the business continued to focus on improving meters per shift, non-billable
hours and revenue per shift while reducing variable and fixed costs to maintain a flat cost structure from a percent of revenue
perspective.
______________________________________________________________________________________
13
13
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
6.2 Review of Segment Operations - Global Products
Financial Information
Third party revenue
COGS
Materials/labor/overhead/other
Inventory obsolescence
Depreciation and amortisation
Total COGS
COGS as a % of Revenue
Contribution margin $
Contribution margin %
Business unit SG&A
Allocated SG&A
EBITDA
Capital Spend (accrual basis)
Other Metrics
Manufacturing plants
Average backlog
Inventories 1
# of Employees
For the year ended 31 December
2018
2017
US$ Millions
US$ Millions
$ Change
% Change
236.6
238.5
(1.9)
-0.8%
175.4
0.3
4.7
180.4
76.2%
39.3
16.6%
16.9
14.3
30.7
1.0
6
27.7
165.4
927
189.8
1.4
6.1
197.3
82.7%
20.5
8.6%
21.3
16.0
11.3
1.1
6
25.9
174.4
976
(14.4)
(1.1)
(1.4)
(16.9)
-6.5%
18.8
8.0%
(4.4)
(1.7)
19.4
(0.1)
-
1.7
(9.0)
(49)
-7.6%
-78.6%
-23.0%
-8.6%
-7.9%
91.7%
93.0%
-20.7%
-10.6%
171.7%
-9.1%
0.0%
6.6%
-5.2%
-5.0%
(1) Represents total Company inventories including Global Drilling Services and Global Products.
Safety
In 2018, the Total Case Incident Rate (“TCIR”) for the Global Products segment was 1.60 recordable incidents per 200,000
hours worked compared to 1.16 in 2017. The Lost-Time Incident Rate (“LTIR”) was 0.40, compared to 0.0 for 2017. As with
the Global Drilling Services division, these results reflect the Company’s continued focus on programs to reinforce hazard
recognition and consistently apply the Company’s EHS management system across all operations. With the release of the
Company’s updated EHS management system, redefined and expanded EHS standards will continue to drive continuous
improvement with a streamlined and comprehensive approach to best practices in safety.
Revenue
The year ended 31 December 2018 revenue of $236.6 million was aligned with 2017 revenue of $238.5 million for the Global
Products division. Revenues generated from coring tools and drill rigs remained strong in 2018 relative to the prior period.
Margins
Although revenue for Global Products was relatively flat compared to 2017, EBITDA for the year ended 31 December 2018
increased by $19.4 million or 171.7%. The increase in EBITDA was primarily driven by flow through of disciplined cost control
in both variable and fixed SG&A. We continue to operate our manufacturing facilities at lean levels, only producing what is
required to meet market demand.
Backlog
At 31 December 2018, Global Products had a backlog of product orders valued at $30.0 million. This compares to $33.5
million at 31 December 2017. Average backlog during the second half of 2018 was $25.4 million compared to $29.8 million
during the first half of 2018. The decrease in our backlog – which we define as product orders we believe to be firm – was
______________________________________________________________________________________
14
BOART LONGYEAR 2018 ANNUAL REPORT
14
Boart Longyear Limited Annual Report 2018
driven by decrease in demand for capital equipment and consumables. It should be noted that an order shipped within the
same month the order is received does not show up in backlog. Also, there is no certainty that orders in our backlog will result
in actual sales at the times or in the amounts ordered.
Intellectual Property
We rely on a combination of patents, trademarks, trade secrets and similar intellectual property rights to protect the proprietary
technology and other intellectual property that are instrumental to our Global Products business. As at 31 December 2018, we
had 418 issued patents, 579 registered trademarks, 182 pending patent applications and 28 pending trademark applications.
One of the most significant products for which we have obtained patent protection during 2018 is our XQ™ wireline coring rod.
The XQ™ wireline coring rods feature self-aligning double start threads, rod joints that engage smoothly without wedging or
jamming, and exclusive heat treatments to provide stronger, longer lasting rods. We do not consider our Global Products
business, or our business as a whole, to be materially dependent upon any particular patent, trademark, trade secret or other
intellectual property.
Research and Development
Our Global Products division employs engineers and technicians to develop, design and test new and improved products. We
work closely with our customers, as well as our Global Drilling Services division, to identify opportunities and develop technical
solutions for issues that arise on site. We believe that sharing best practices amongst our divisions accelerates innovation and
increases safety and productivity in the field. This integrated business model provides us with an advantage in product
development, and we believe it enables us to bring new technology to the market with speed and quality. Prior to their
introduction, new products are subjected to extensive testing in various environments, again with assistance from our Global
Drilling Services network. New product development efforts remain focused on product changes that continue to drive
increased safety and productivity, so customers see real added value regardless of the business environment. Our recent
successes include the LF160 surface coring drill paired with our Freedom Loader which has set a new benchmark in
productivity and hands-free rod handling. Launched in the second half of 2017, our patented Longyear™ coloured diamond
bits continue to show improved productivity by lasting longer and cutting faster. Commercial launch of the new XQ™ coring
rod continues globally, featuring a greater depth capacity than the RQ™ rod, and faster, easier joint make/breaks for higher
productivity.
Under our Geological Data Services business, TruCore™ core orientation tools continue to expand geographically and are
available globally. The TruShot™ magnetic survey technology, the second in a future suite of tools, was launched in 2018 and
is available globally. Our TruscanTM matrix calibrated XRF and photo sample scanning technology is currently being used at
several locations around Australia with long term 24/7 utilisation producing results that are being used for real time decision
making by the mining client. TruscanTM continues to spread its footprint globally with additional units being deployed within
Australia as well as North and South America.
TruscanTM was the winner of the South Australia Governments “Excellence in Innovation – Productivity Improvement” in
November 2018. New features utilising artificial intelligence and machine learning continue to be integrated in to TruscanTM
ensuring it is well differentiated in the market.
These technologies are part of our strategy to provide subsurface resource defining information to mining companies, which is
now even further enhanced through the acquisition of Globaltech in the second half of 2018.
Inventories
Cash continued to be generated from inventory in 2018 due to continued management of demand in our supply chain
organisation and continuous efforts to reduce excess inventory. There was a significant push to scrap product that cannot be
utilised in the business. The Supply Chain teams scrapped $15.5 million of product that will result in decreased operating
expenses. We also generated $3.9 million of cash related to third-party sales and consumption in our Global Drilling Services
division. As a result of efforts to generate cash and scrap old product, days on hand improved by 16 days in 2018. There will
be ongoing focus in 2019 to increase inventory turnover to support the business with less inventory requirements.
______________________________________________________________________________________
15
15
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
7. Outlook
7.1 Our 2019 Priorities
Continue to eliminate job related injuries and significant safety risks by maintaining and enhancing our strong safety
and compliance record. Safety is critical to the Company, our employees and our customers, both in determining the
success of our business and in ensuring the ongoing well-being of our employees and others with whom we come into
contact. We are dedicated to providing a safe work environment for every employee and contractor and implementing state-
of-the-art safety tools and practices to become the safety leader in our industry. We are particularly focused on critical risks,
continually seeking ways to mitigate those risks and ensuring that, when significant incidents or high-potential near-misses
occur, we thoroughly investigate the root causes of those incidents and apply the lessons learned from them broadly. We also
promote a culture where employees and managers at all levels are actively engaged in promoting safe work practices.
Four areas of focus for 2018 that will benefit our safety in 2019 are (1) the implementation of the BLY Integrated Training
System (BITS); (2) implementation of simplified EHS Field Standards setting company expectations; (3) the implementation
and refocus on our global Field Level Risk Assessment (FLRA) process; and (4) EHS Lead Indicator KPI’s which will include:
Critical Risk Management – Critical Control Verifications, BITS assigned training modules, In-Vehicle Monitoring System
utilization, and Corrective Action closure metrics.
Expand our mining and minerals drilling customer base by focusing on efficiency and productivity.
We remain focused on providing our customers with a full range of drilling services offerings. Our commitment is underpinned
by initiatives to improve the efficiency and productivity with which we deliver services and information to our customers,
combined with enhancements of our commercial practices and capabilities to ensure alignment with our customers’ most
important needs. Specifically, our goal is to increase our business with our existing customers and find new ways to partner
with existing and potential customers to grow our business.
Effectively manage customer relationships, pricing and contract terms. Our Global Drilling Services and Global Products
businesses have implemented rigorous internal processes to ensure our products and services reflect the full value delivered
to our customers and to solidify and create lasting customer relationships.
Create new products and respond to new opportunities within a constrained capital budget. We will continue to pursue
disciplined investments in our business to drive returns and capitalise on high-value opportunities in which we can leverage
distinctive competencies. We also will continue to pursue strategic technologies and high value-added and more profitable
activities, such as expanding our product and services offerings to provide subsurface resource information to our mining
customers through our Geological Data Services business.
Improve cash generation in 2019, with the goal to continue to be cash positive, through careful management of
liquidity and costs. Ongoing improvement in cash generation in 2019 is a primary goal for the business, which we intend to
achieve through continued disciplined expense and capital management, opportunistic cost reductions and productivity
enhancements. We will continue to drive business initiatives focused on improving our fixed and variable cost structures in
keys areas of the business and we expect these benefits to improve liquidity in 2019 and beyond. Furthermore, we will
continue to focus on process improvements, streamlined working capital management and structural changes to improve
customer support and responsiveness and drive long-term efficiencies by embedding a cash return on investment metric
throughout the organisation.
7.2 Outlook and Future Developments
We are not providing an outlook for 2019 revenue or EBITDA. However, increased drilling activity, in combination with our
productivity and commercial initiatives are making a positive impact as demonstrated by the improved underlying 2018 results.
We anticipate seeing ongoing gains from those identified initiatives which we continue to actively manage.
The mining industry is cyclical and 2018 continued to show signs of marking a return to the longer-term growth outlook for the
industry, underpinned by:
•
•
•
•
•
continued industrialisation and urbanisation of developing economies, which are expected to support structural
increases in demand for minerals and metals broadly in line with global GDP;
improving cash position of our customers;
improving commodity prices and corresponding customer margins relative to those of recent years;
improving supply/demand fundamentals in key commodities like copper;
reduced reserve to production ratios at many gold mines.
As a result, we retain confidence in our belief that natural resources companies will continue to produce throughout the cycle.
This will continue to drive the need to both replace and supplement ongoing depletion of reserves and resources, driving future
investment in exploration, development and capital spending. As the leading global drilling services provider to the mineral
______________________________________________________________________________________
16
BOART LONGYEAR 2018 ANNUAL REPORT
16
Boart Longyear Limited Annual Report 2018
industry, we continue to drive operational improvements and technological innovation across our global fleet of assets, which
we believe will continue to benefit the business through increased market opportunities.
We remain focused on our core mining markets and intend to continue to invest in growth opportunities in a selective and
disciplined manner. We will continue to invest to develop the next generation of rod-handling solutions across our range of
drilling rigs and expand the provision of subsurface resource information to our mining customers through our Geological Data
Services business. In addition, we continue to pursue operational enhancements through safety and productivity
improvements to deliver value to our customers and improve bottom line operating performance of our business.
Further information about likely developments in the operations of the Company in the future years, expected results of those
operations, and strategies of the Company and its prospects for future financial years have been omitted from this report
because disclosure of the information would be speculative or could be prejudicial to the Company.
7.3 Key Risks
The Company maintains an Enterprise Risk Management (“ERM”) system by which we systematically assess the
consequences of risk in areas such as market, health and safety, environment, finance, legal compliance, and reputation. We
also identify and track appropriate mitigation actions for identified risks. A range of material risks have been identified, as
follows, that could adversely affect the Company. These risks are not listed in order of significance. Nor are they all-
encompassing. Rather, they reflect the most significant risks identified at a whole-of-entity or consolidated level.
Market Risk. The Company’s operating results, financial condition and ability to achieve shareholder returns are directly
linked to underlying market demand for drilling services and drilling products. Demand for our drilling services and products
depends in significant part upon the level of mineral exploration, production and development activities conducted by mining
companies, particularly with respect to gold, copper and other base metals. In prior years we have experienced significant
declines in our financial performance as a result of the global contraction in exploration and development spending in the
commodities sector, and the subsequent impact on our mining customers. Mineral exploration, production and development
activities remain uncertain and could remain at current levels for an extended period of time or decline even further, resulting
in adverse effects on our operating results, liquidity and financial condition.
We seek to mitigate the risk associated with volatility and weak demand conditions in our core mining markets by selectively
pursuing opportunities in other markets, such as infrastructure and geotechnical applications for our Global Products business,
and new technology offerings such as our Geological Data Services business. In addition, our business priorities include
ongoing initiatives to further improve the underlying cost structure and simplify the business. We also seek to gain market
share and expand our customer base in our core mining market by improving the efficiency and productivity with which we
deliver services and information, and improve commercial practices for better alignment with our customers’ needs.
Operational Risks. The majority of our drilling contracts are either short-term or may be cancelled upon short notice by our
customers, and our products backlog is subject to cancellation. We seek to strengthen customer relationships and lessen
retention risks through active customer selection, improved commercial practices and ongoing initiatives targeted at
strengthening our operational and safety performance. We also pursue contracting practices to minimise the financial cost
associated with the termination or suspension of customer contracts or orders. The degree to which we can allocate
termination risks and obligations to our customers remain somewhat limited by industry practice.
We have implemented significant cost savings, productivity improvements and efficiencies over the past five years, but our
future operating results, financial condition and competitiveness depend on our ability to sustain previously implemented
reductions and realise additional savings and improvements from ongoing and future productivity initiatives. We may not be
able to achieve expected cost savings and operational improvements in anticipated amounts or within expected time periods,
and, if achieved, we may not be able to sustain them. Accordingly, we have implemented a project management organisation
and rigorous monitoring processes around our key operational improvement programmes to track progress against project
objectives, quantify results that are being achieved and ensure process improvements are sustainable.
Risks Related to Liquidity and Indebtedness. At 31 December 2018, our net debt was $682.6 million, with $721.5 million in
gross debt and $38.9 million of cash on hand. The Company also has an additional $14.1 million of liquidity available through
the Asset-Based Loan (“ABL”) facility. The instruments comprising the Company’s debt and their terms are set out in detail in
Note 21 of the financial statements.
The annual financial report has been prepared on a going concern basis, which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business. The Directors reaffirm that current and expected operating cash
flow, cash on hand and available drawings under the Company’s asset-based loan facility provide sufficient liquidity to meet its
debts as and when they fall due.
Tax Risk. As previously disclosed and further detailed in Note 11 of the financial statements, the Company is contesting a
series of tax audits performed by the Canada Revenue Agency (“CRA”). We also are responding to audits that are underway
______________________________________________________________________________________
17
17
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
or anticipated to be performed by the CRA. The resolution of existing and potential assessments by Canadian tax authorities
may adversely affect our liquidity. While the timing and resolution of the Company’s appeals of the CRA’s assessments are
uncertain, we are pursuing strategies to mitigate the risks of an adverse outcome with the assistance of our external legal and
tax counsel.
Government and Regulatory Risk. Changes in, or failure to comply with, the laws, regulations, policies or conditions of any
jurisdiction in which we conduct our business could have a material adverse effect on our financial condition, liquidity, results
of operations and cash flows. Our operations are subject to numerous laws, regulations and guidelines (including anti-bribery,
tax, health and safety, and environmental regulations) that could result in material liabilities or increases in our operating costs,
or lead to the decline in the demand for our services or products. We therefore carefully monitor, and educate our employees
and business partners about, legal requirements and developments to make sure our operations remain aware of applicable
laws and regulations at all times. Further, we have implemented various internal and external resources and controls to
promptly detect and address any potential non-compliance.
7.4 Forward Looking Statements
This report contains forward looking statements, including statements of current intention, opinion and expectation regarding
the Company’s present and future operations, possible future events and future financial prospects. While these statements
reflect expectations at the date of this report, they are, by their nature, not certain and are susceptible to change. The
Company makes no representation, assurance or guarantee as to the accuracy of or likelihood of fulfilling any such forward
looking statements (whether express or implied), and, except as required by applicable law or the Australian Securities
Exchange Listing Rules, disclaims any obligation or undertaking to publicly update such forward looking statements.
______________________________________________________________________________________
18
BOART LONGYEAR 2018 ANNUAL REPORT
18
Boart Longyear Limited Annual Report 2018
REMUNERATION REPORT
This remuneration report has been prepared in accordance with section 300A of the Australian Corporations Act 2001 and
summarises the arrangements in place for the remuneration of directors, Key Management Personnel (“KMP”) and other
employees of Boart Longyear for the period from 1 January 2018 to 31 December 2018.
Changes in 2018
In late 2018 the Company announced that Brendan Ryan would transition to the role of Chief Business Development Officer.
Additionally, Miguel Desdin was identified to replace Mr Ryan as Chief Financial Officer. This change was carefully designed
to support the key strategic, financial, growth and human resources objectives of the Company.
1. 2018 REMUNERATION OVERVIEW
Four principles guide our decisions about executive remuneration at Boart Longyear:
•
•
•
•
Fairness: provide a fair level of reward to all employees.
Transparency: build a culture of achievement by transparent lines between reward and performance.
Alignment: promote mutually beneficial outcomes by aligning employee, customer and shareholder interests.
The Boart Longyear Culture: drive leadership performance and behaviors that create a culture that promotes safety,
diversity and employee satisfaction.
This Report sets out the remuneration arrangements in place for the Key Management Personnel (“KMP”) of the Company for
the purposes of the Corporations Act and the Accounting Standards, being those persons who have authority and
responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including the Non-
Executive Directors.
1.2 DIRECTORS AND SENIOR EXECUTIVES
Directors and senior executives who were KMP during the year ended 31 December 2018 were:
Directors
Position
Senior Executives
Position
Marcus Randolph
Executive Chairman
Jeffrey Olsen
Executive Director and Chief Executive Officer
Kyle Cruz
Non-executive Director
Robert Closner
Vice President, General Counsel & Company Secretary
Lawrence First
Non-executive Director
Miguel Desdin
Chief Financial Officer (appointed effective January 2019)
Jason Ireland
James Kern
Non-executive Director
Denis Despres
Chief Operating Officer
Non-executive Director
Kari Plaster
Chief Human Resources Officer
Gretchen McClain
Non-executive Director
Brendan Ryan
Chief Business Development Officer
Jeffrey Olsen
Robert Smith
Executive Director
Non-executive Director
Richard Wallman
Non-executive Director
Eric Waxman
Non-executive Director
1.3 REMUNERATION OUTCOMES
The actual remuneration earned by executives is set out below. This information is considered to be relevant as it provides
shareholders with a view of the remuneration actually paid to executives for performance for the year ended 31 December
2018. This differs from the remuneration details prepared in accordance with statutory obligations and accounting standards,
which are reported on page 28 of this Report. The remuneration calculations reported there are based on the Accounting
Standards principle of “accrual accounting” and, consequently do not necessarily reflect the amount of compensation an
executive actually realised in a particular year.
Compensation represents base salary and benefits such as US 401(k) retirement plan, Company matching and/or profit
sharing contributions, car allowance, and tax preparation service reimbursement. STI represents the cash paid in respect of
the executive’s Short Term Incentive (“STI”) award earned for the prior year’s performance but paid in the current reporting
year and Other represents sign-on bonuses granted in 2016 - 2017 and paid in 2018.
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19
19
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
Sr. Executive Remuneration
US$
Compensation
STI1
LTI (cash)2
Jeffrey Olsen
Brendan Ryan
Robert Closner
Kari Plaster
Denis Despres
625,962
400,000
240,941
271,154
400,000
312,120
131,090
38,772
10,046
128,593
-
-
-
-
66,667
Other3
36,955
27,050
20,543
46,526
128,945
Total
975,037
558,140
300,256
327,726
724,205
(1) Represents the cash paid in respect of the executive’s STI earned for the prior year’s performance, but paid in the current reporting
year. For further details of the STI plan, see section 3.2.
(2)
In 2016 Mr Despres was awarded a one-time, share award of $200,000 to be paid in equal installments of one-third on each
anniversary of his hire date (1 September 2016) beginning with the first anniversary and ending on the third. In 2018 he received the
second installment of $66,667. Mr Despres opted to receive cash instead of Company shares.
(3) Represents benefits such as US 401(k) retirement plan, car allowance and tax preparation service reimbursement. Also includes
sign-on bonuses and other bonuses granted and paid in 2018, including the second of three installments of Mr Despres’ sign on
bonus.
1.4 EXECUTIVE REMUNERATION STRATEGY
The Board recognizes that appropriate remuneration for BLY executives and other employees is inextricably linked to the
attraction, development, performance and retention of top-level talent and human capital. Given the current economic climate
and the ongoing skills shortage, it is essential that adequate measures are in place to attract and retain the required skills. In
order to meet the strategic objectives of a high-performance organization, the remuneration philosophy is positioned to reward
strong performance and to maintain that performance over time.
The primary objectives of Boart Longyear’s policy are to:
•
•
•
•
attract, motivate, reward and retain key talent;
promote the organization’s strategic objectives, within its risk appetite;
promote positive outcomes across the geographies where we operate;
promote an ethical culture and behaviour that are consistent with values and which encourage responsible corporate
citizenship.
______________________________________________________________________________________
20
BOART LONGYEAR 2018 ANNUAL REPORT
20
Boart Longyear Limited Annual Report 2018
2. REMUNERATION FRAMEWORK AND STRATEGY
This section outlines the Company’s remuneration governance framework and strategy and explains how the Board and
Remuneration Committee make remuneration decisions that underpin the remuneration for senior executives, including the
use of external remuneration consultants.
The diagram below illustrates the primary design features of the Company’s executive remuneration strategy and how the
components of overall remuneration have been designed to support them:
Attraction and Retention
Best Practice
Fairness and Alignment
Pay for Performance
▪ Accurate and up-to-date
market information and
information on trends is
a crucial factor in
determining the quantum
of the remuneration
packages.
▪ Remuneration levels are
competitive with similar
roles in the markets in
which the Company
competes for talent.
▪ Fixed and at risk
remuneration is
appropriately industry
and market competitive.
▪ Long-term incentive
compensation provides
for meaningful retention.
▪ The long-term incentive
component is delivered
to Directors and
Executives through the
Management Incentive
Plan.
▪ Reward packages and
practices reflect local
and international best
practice, where
appropriate and
practical.
▪ There is a significant
amount of total
executive remuneration
which is at risk and
dependent upon
achieving challenging
key business objectives.
▪ Performance
management assists in
indicating the overall
total rewards for each
ExCo member.
▪ Compensation is
relevant and meaningful
to the Executive
receiving it.
▪ RemCo regularly
▪ The framework
performs executive
compensation
benchmarking utilising
independent
compensation
consultants.
▪ Reward measures for
executives are aligned
with, linked to and
influenced by the
interests and strategies
of BLY and its
shareholders.
encourages consistency,
but allows for
differentiation where it is
fair, rational and
explainable.
▪
Incentive based
compensation is
designed to reward
executives for delivered
performance against
important Company,
safety, financial and
strategic objectives.
▪ The aspiration is that our
▪
remuneration
philosophy, policy and
practices, as well as the
processes to determine
individual pay levels are
transparent.
▪ Clawback: where
performance
achievements are
subsequently found to
have been misstated,
provisions are made for
redress.
Incentive plans utilise an
appropriate mix of
challenging performance
measures designed to
deliver value to
executives when
performance is achieved
over short and longer
terms.
▪
Incentive based
compensation provides
for upside potential with
strong performance.
2.1 HOW REMUNERATION DECISIONS ARE MADE
Board Responsibility
The Board acknowledges its responsibility for the Company’s remuneration arrangements and ensures that they are equitable
and aligned with the long-term interests of the Company and its shareholders. In performing this function and making
decisions about executive remuneration, the Board is informed by and considers input from management, but retains
independent decision making authority. To assist in making decisions related to remuneration, the Board has established a
Remuneration and Nominations Committee.
Remuneration and Nominations Committee (“Remuneration Committee” or “Committee”)
The Remuneration Committee (RemCo) has been established to assist the Board with remuneration issues and is responsible
for ensuring that the Company compensates appropriately and consistently with market practices. RemCo also seeks to
ensure that the Company’s remuneration programs and strategies will attract and retain high-calibre Directors, executives and
employees and will motivate them to maximise the Company’s long-term business and create value for shareholders and
support the Company’s remuneration related principles.
______________________________________________________________________________________
21
21
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
The Remuneration Committee’s responsibilities include:
•
•
•
•
•
•
•
•
review of strategic objectives;
reviewing, monitoring and overseeing the implementation of the executive remuneration policy;
reviewing all aspects of remuneration of the CEO and the proposed remuneration of other Key Management
Personnel (KMP), including any proposed change to the terms of their employment and any proposed termination
payments;
reviewing executive incentive plans, including equity-based plans and including consideration of performance
thresholds and regulatory and market requirements;
developing performance thresholds for the CEO and reviewing proposed performance thresholds for other KMP;
reviewing and approving performance achievement relative to executive incentive plans;
overseeing strategies for recruitment, retention and succession planning for Directors and key executive positions; and
reviewing the composition of the Board and monitoring the performance of the Board and the Directors.
The charter of the Remuneration Committee is set out in full on the Company’s website at www.boartlongyear.com.
The Committee members as at the date of this Report are Ms Gretchen McClain, Chairman, Mr Kyle Cruz, Mr Jason Ireland,
and Mr Eric Waxman. The CEO, the Chief Human Resources Officer and other members of senior management attend
meetings of the Remuneration Committee, as appropriate, to provide information necessary for the Remuneration Committee
to discharge its duties. Individual executives do not attend or participate in discussions where recommendations regarding
their own circumstances are determined.
Use of Remuneration Consultants and/or External Advisors
Where appropriate, the Board seeks and considers advice from independent remuneration consultants and external advisors.
Remuneration consultants are engaged by, and report directly to, the Remuneration Committee and support it in assessing
market practice so that base salary and targeted short-term and long-term compensation are in line with comparable roles.
When remuneration consultants are engaged, the Committee ensures their independence, as necessary, from Company
management in accordance with the assignment or advice being sought. Thus, the Committee may determine that complete
independence from management is required, or it may direct the consultant to work with Company management to obtain
relevant information or input in order to formulate advice or recommendations to the Committee.
The Committee has also established a formal Protocol that summarises the policy and procedures the Company has adopted
to govern the relationship between the independent remuneration consultant, the Committee and management. The Protocol
was developed in compliance with the obligations under Part 2D.8 of the Corporations Act and ensures that the remuneration
consultant remains free from any undue influence by any member of the KMP to whom the recommendations relate. All
consultant remuneration recommendations are provided directly to the Committee and are accompanied by an undue
influence declaration from the consultant.
In 2018, the Committee relied on the external review of Mercer subject matter experts as well as key Centerbridge Partners in
the creation and administration of the new Management Incentive Plan (MIP). In addition, the Committee continued to rely on
the independent market review of KMP compensation obtained from Mercer Consulting.
2.2 REMUNERATION COMPENSATION STRATEGY
There are several components of an executive’s total compensation opportunity: fixed compensation, short and long-term
incentives as well as non-monetary benefits.
Fixed Remuneration: guaranteed package delivered as a cash salary and mix of compulsory and discretionary benefits
reflects market-relatedness in conjunction with the individual’s background, competence and potential.
•
Provides a predictable base level of compensation commensurate with the executive’s scope of responsibilities,
leadership skills, values, performance and contribution to the Company.
• Generally targeted to be near the median of the competitive talent market using external benchmarking data. Since
the majority of the Company’s executives (and all of the executive KMP) are located in the US, the competitive talent
market is determined to be the US market.
•
Variability around the median is based on the experience, performance, skills, position, business unit size and/or
complexity and unique market considerations, where necessary.
______________________________________________________________________________________
22
BOART LONGYEAR 2018 ANNUAL REPORT
22
Boart Longyear Limited Annual Report 2018
Short Term Incentive Program: creates a high-performance culture by providing a cash bonus annually. This is determined
based on role and responsibility as well as achievement against predetermined performance hurdles for business and
personal goals.
•
•
•
•
•
This component of compensation is “at-risk” and earned when certain performance metrics are achieved.
Key performance metrics are determined annually, in alignment with the Company’s business strategy. They include
some measure of the following (or related) metrics: free cash flow, adjusted EBITDA, safety performance, and
individual strategic goals.
These metrics were designed to reflect corporate as well as business unit level performance. This helps to ensure
rewards are relevant and affordable as well as reflective of performance. The metrics weight performance in areas
which build and promote collaboration and ensure alignment to strategy and shareholder interests.
Individual strategic goals can include financial, operational, strategic or project based targets. Examples include items
such as, milestone achievement, revenue growth, cost control goals, cash flow generation, geographic expansion, and
productivity programs.
The STI is awarded in cash and will either be paid all at once, or in a staggered fashion, dependent on key business
factors at the discretion of the Board.
Long Term Incentive Program: based on the individual’s performance and value to the business. It is achieved through
achievement and alignment with shareholder interests. See section 3.3 of the Remuneration report for more information.
•
•
•
This component of compensation is “at-risk” and earned only if challenging performance metrics are achieved and/or
continued service requirements are met over a multi-year performance period.
In January of 2018, the long-term incentive plan design changed where LTIP was replaced with another Management
Incentive Plan. This plan is driven by Total Enterprise Value (TEV). The plan creates value for participants when
specific criteria are reached for performance as well as time vesting. The MIP enables cash and/or share releases to
participants as and when its shareholders monetise their shareholdings at various volumes.
The LTI is awarded in cash or shares, at the discretion of the Board.
Other Benefits (Monetary and Non-monetary): provided to ensure executive compensation remains relevant and
Executives are well cared for.
Non-monetary Benefits include: meaningful work, access to continuous learning and professional growth, recognition and
appreciation, career advancement and in some cases flex schedules and/or tele-commuting.
Additional Monetary Benefits include: various types of insurance: D&O, life, and regionally based health and welfare insurance
for employee and family members; as well as vehicle allowances and/or other regionally based perks.
______________________________________________________________________________________
23
23
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
3. COMPONENTS OF EXECUTIVE REMUNERATION
Total remuneration for the CEO and senior executives is made up of fixed remuneration (consisting primarily of base salary
and superannuation contributions (or the foreign equivalent, such as the United States’ 401(k) payments) and variable “at-risk”
remuneration. The variable remuneration has two “at-risk” components:
•
•
STI – being an annual bonus granted under the Company’s Corporate Bonus Plan; and
LTI – being cash tied to vesting conditions, such as performance hurdles (TEV) and continued employment.
The relevant proportion of fixed to at-risk components for senior executive remuneration during 2018 are shown below. The
table illustrates the annualised remuneration mix for executive KMP, including annualised fixed salary, target STI (assuming
that 100% of target bonus performance is achieved).
100%
80%
60%
40%
20%
0%
55%
45%
36%
64%
29%
30%
71%
70%
36%
64%
J E F F R E Y
O L S E N
B R E N D A N
R Y A N
R O B E R T
C L O S N E R
K A R I
P L A S T E R
D E N I S
D E S P R E S
Fixed
At Risk STI Potential
3.1 FIXED REMUNERATION
The fixed component of executive remuneration consists primarily of base salary. Senior executives also receive other
benefits, such as a vehicle allowance. In addition, the Company contributes to retirement programs, such as the United States’
401(k) defined contribution retirement plan.
Base salaries are reviewed annually by the Remuneration Committee (or, for the CEO, by the Board) and may be adjusted as
appropriate to maintain market competitiveness and/or to make adjustments based on merit in accordance with the CEO’s
recommendation.
3.2 SUMMARY OF THE SHORT-TERM INCENTIVE PROGRAM
The Short-Term Incentive program, or Corporate Bonus Plan (“CBP”), provides certain employees with the potential to receive
an annual bonus if the Company meets annual financial and safety objectives, which are reviewed and approved by the
Remuneration Committee.
Potential target incentives under the CBP range between 10% and 100% of an employee’s base salary depending on the
employee’s role. The actual bonus that an employee will receive under the CBP (if any) will vary depending on the Company’s
and the individual’s performance against established annual objectives and targets, as detailed more fully below.
There are four key Company performance components (1) free cash flow; (2) adjusted EBITDA; (3) Safety and (4) Individual
component for the CBP. Each component has a threshold performance level; a target level of performance, and a maximum
stretch level of performance whereby superior results can earn up to 200% of that component of the bonus. All bonuses
awarded under the CBP are paid in cash.
The CBP performance components for 2018 and their relative weighting are:
(1) Corporate Financial Target - Free Cash Flow (FCF) - 30% of the Company’s CBP Metrics opportunity is linked to the
Company’s FCF performance. For the purposes of calculating FCF, the statutory FCF is adjusted to eliminate the
______________________________________________________________________________________
24
BOART LONGYEAR 2018 ANNUAL REPORT
24
Boart Longyear Limited Annual Report 2018
impact of items such as cash restructuring costs, pension plan pre-funding, interest and income tax receipts or
payments, acquisition or disposals of subsidiaries, and cash flows from financing activities, including, but not limited
to, proceeds from equity raisings and borrowings.
The free cash flow metric was selected to ensure proper alignment and focus on the critical need to generate cash to
fund ongoing operations and reduce debt.
(2) Corporate Financial Target – Adjusted EBITDA - 50% of the Company’s CBP Metrics opportunity is linked to the
Company’s Adjusted EBITDA performance. For the purposes of calculating Adjusted EBITDA, Statutory EBITDA plus
Significant Items = Adjusted EBITDA.
(3) Corporate Non-Financial Target - Safety - 20% of the Company’s CBP Metrics opportunity is dependent upon the
Company’s overall safety performance.
The Board and management believe that a component of the CBP based on safety results appropriately focuses
Company employees on adopting safe work practices, continuously identifying ways to reduce or eliminate hazards
or unsafe behaviours and getting employees home safely every day. Further, safety is paramount to the Company’s
customers, and the Company’s ability to secure or retain work is impacted by its safety performance.
For 2018, the Board agreed, on the recommendation of its Audit, Safety and Risk Committee to use total case
incident rates (TCIR), lost time incident rates (LTIR), Critical Risk Incident Rate and leading indicators as the
measurements of safety performance for the CBP.
(4)
Individual Strategic Objectives - 100% of the Individual Strategic Objective CBP opportunity is dependent upon
performance against strategic objectives relevant to the employee’s operational or functional responsibility.
Examples of strategic objectives may include: operational or functional cost targets, geographic or targeted market
segment or customer growth, new product introductions, leadership, talent retention and development and specific
project or initiative progress, etc. Individual objectives carry individual proportions of 100%.
Strategic objectives are utilised to reinforce continued focus on critical initiatives and operational or functional
priorities that have a positive impact on current and/or future business performance. Strategic objectives should be
pursued regardless of the business or market pressures impacting the overall corporate financial performance.
Stretch performance on strategic objectives can be achieved to a maximum of 200% of the weighting of this
component. Depending on the nature of the objective, stretch performance can be defined when the objective is
approved at the beginning of the year, or in some circumstances be determined by the CEO and approved by the
Board at the end of the year. The Board has discretion to modify the amount of the strategic objective award up or
down as appropriate
3.3 SUMMARY OF THE LONG-TERM INCENTIVE PROGRAM
On 31 December 2017 the Long Term Incentive Plan (LTIP) and Retention Incentive Grant Agreement (RIGA) programs
ceased. Retention based awards, under LTIP, were calculated on a pro-rata basis as of 31 December 2017 and will be paid
on the original payment date as per the award agreement. Performance based awards and stock option plans, under the LTIP,
were cancelled as of 31 December 2017.
Effective 1 January 2018 the Board approved a resolution to introduce a new long term incentive plan, the Management
Incentive Plan (“MIP”).
The MIP is a long-term incentive plan, which is similar in design to a stock option plan, and consistent with many incentive
plans in private equity, in that it allows participants to share in the gain of Boart Longyear’s value over time. The MIP was
created to give senior leaders an opportunity to share in the growth and value of Boart Longyear’s business success.
The executives eligible to participate in the MIP are senior management and corporate executives, including the KMP. The
percentage of the MIP payouts vary depending on the participant’s position, skills and contributions to the Company. The
percentage amounts are generally based on market averages for comparable roles at similar-sized companies.
There are both time and performance vesting hurdles in the MIP.
The time vesting portion of the MIP represents 33.3% of the plan and is spread over a 5-year time window.
______________________________________________________________________________________
25
25
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
The performance vesting portion of the MIP represents 66.7% of the plan and is based on Boart Longyear’s gain in Total
Enterprise Value (TEV), above a baseline of $650 million.
The MIP includes a two-tiered performance vesting criteria; one set at $900 million TEV, representing 33.3% of the award and
the other set at $1.1 billion TEV, which represents the final 33.3% of the award.
Performance vesting is based on a trigger events aligned with sale of ownership at certain predetermined levels. Upon these
trigger events, TEV will be measured and if the criteria are met, business leaders will be paid a percentage of the value
accretion, based on their MIP allocation.
There has been no trigger event with respect to performance vesting criteria, so no accrual has been recorded for 2018.
The MIP will be paid in either cash or shares at the discretion of the Board.
3.4 EXECUTIVE REMUNERATION CLAWBACK POLICY
The Company has an incentive compensation clawback policy applicable to current and former senior executives, including
the KMP listed in this report, as well as any other management of the Company who participated in the Company’s incentive
compensation plans. The policy is applicable to incentive compensation including bonuses, awards or grants of cash or equity
under any of the Company’s short or long-term incentive or bonus plans where bonuses, awards or grants are based in whole
or in part on the achievement of financial results. If the Board determines that a covered employee was overpaid as a result of
his or her fraud or willful misconduct that requires a restatement of the reported financial results, the Board may seek to
recover the amount of the overpayment by a repayment or through a reduction or cancellation of outstanding future bonus or
awards. The Board can make determinations of overpayment at any time through the third fiscal year following the year for
which the inaccurate performance criteria were measured.
4. PERFORMANCE AND RISK ALIGNMENT
Below is a summary of our year on year operating performance which underpins our compensation program.
Net debt excludes the impact of recapitalization transactions, letters of credit, CRA & IRS obligations, strategic asset
acquisitions and disposals, equity raise, and potential asset backed loans. Dividends per share are calculated as basic EPS
divided by closing share price.
Financial
Year
Closing
Share Price
$A
Dividend
p/share
US$
2018
2017
2016
2015
2014
0.01
0.01
0.13
0.06
0.17
-
-
-
-
-
EPS %
(23.5%)
(205.1%)
(179.4%)
(822.4%)
(510.9%)
Revenue
US$ millions
Adj. EBITDA
1
US$ millions
ROE
Net Debt
US$ millions
770
739
642
735
867
81
43
32
0
31
(15.3%)
(50.3%)
(60.6%)
(596.1%)
(133.4%)
683
599
681
586
551
(1) Adjusted EBITDA is 'Earnings before interest, tax, depreciation and amortisation and before signficant and other non-recurring items.
4.1 PERFORMANCE AGAINST SHORT AND LONG-TERM INCENTIVE MEASURES
A combination of financial and non-financial measures is used to measure performance for STI awards. Business and
individual performance against those measures was measured on a weighted average basis. The average proportion of STI
awarded, 2014 through 2018 is below:
% of target STI awarded
2014
122%
2015
114%
2016
90%
2017
53%
2018
103%
______________________________________________________________________________________
26
BOART LONGYEAR 2018 ANNUAL REPORT
26
Boart Longyear Limited Annual Report 2018
STI earned during the year ended 31 December 2018:
STI Earned in 2018
STI Earned
US$
Target STI
US$
STI Earned
as % of
Target
% of STI
Forfeited
STI as % of
Max STI 1
% of Max
STI
Forfeited
Jeffrey Olsen
Brendan Ryan
Robert Closner
Kari Plaster
Denis Despres
767,981
226,320
99,187
135,546
295,200
675,000
240,000
100,800
116,000
240,000
114%
94%
98%
117%
123%
0%
6%
2%
0%
0%
57%
47%
49%
58%
62%
43%
53%
51%
42%
39%
(1) The maximum potential award assuming superior performance against all CBP metrics is 200% of target STI.
4.2 EMPLOYEE AND DIRECTOR TRADING IN COMPANY SECURITIES
Under the Company’s Securities Trading Policy, Directors and employees (including senior executives) are prohibited from
entering into transactions that limit the economic risk of holding unvested Rights or options that have been received as part of
their remuneration. The Company treats compliance with this policy as a serious issue and takes appropriate measures to
ensure the policy is adhered to, including imposing appropriate sanctions where an employee is found to have breached the
policy.
Further restrictions also apply to Directors and senior executives with respect to their dealing in the Company’s shares and
other securities under the Securities Trading Policy, which may be found in the Corporate Governance section on the
Company website at www.boartlongyear.com.
______________________________________________________________________________________
27
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BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
5. EXECUTIVE REMUNERATION IN DETAIL
Details of each senior executive’s remuneration during the years ended 31 December 2018 and 2017 are set out in the table
below. The remuneration calculations reported in this table are based on the Accounting Standards principle of “accrual
accounting” and, consequently do not necessarily reflect the amount of compensation an executive actually realised in a
particular year. It should be noted that Mr Rasetti, Mr Baker and Mr Irwin are not included in the table below because they
ceased employment in 2017. Details of their remuneration is available in the 2017 annual report.
Short term benefits 1
Post-employment benefits
Other long-term benefits
Cash-based compensation
Non-cash-based compensation
Share-based compensation 2
Jeffrey Olsen
2018
2017
Brendan Ryan
2018
2017
Robert Closner
2018
2017
Kari Plaster
2018
2017
Denis Despres
2018
2017
Compensation
US$
625,962
586,154
400,000
400,000
240,941
186,800
271,154
41,538
400,000
400,000
Annual
bonus 3
US$
767,981
312,120
226,320
131,090
99,187
40,584
135,546
10,046
Other 4
US$
28,705
25,480
20,800
51,459
20,543
24,237
40,800
3,200
295,200
128,593
122,695
22,778
Super-
annuation
benefits 5
US$
Other
US$
Retention
Cash Rights
US$
Perform-
ance Cash
Rights
US$
Options
US$
Rights
US$
Share-
based
%
Total
US$
8,250
8,100
6,250
8,100
-
-
5,726
312
6,250
8,100
-
-
-
-
-
-
-
-
-
-
-
62,500
-
38,250
-
122,468
-
-
-
10,088
-
-
66,667
66,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,688
-
65,001
-
37,753
-
-
-
143,333
-
1,430,898
13.0% 1,186,760
-
9.9%
653,370
655,651
-
12.6%
360,671
299,462
-
-
453,226
55,096
-
18.6%
890,812
769,471
(1) There were no non-monetary benefits provided.
(2)
In accordance with the requirements of the Australian Accounting Standards Board, remuneration includes a
portion of the historical fair value of equity compensation recognised over the respective vesting period (i.e. Rights
awarded under the LTIP and options awarded under the Option Plan(s)). The fair value of equity instruments is
determined as at the grant date and is recognised over the vesting period. The amount included as remuneration is
not related to or indicative of the benefit (if any) that senior executives may ultimately realise should the equity
instruments vest. The fair value of options at the date of their grant has been determined in accordance with AASB
2 applying Black-Scholes and Brownian Motion valuation methods.
(3) The 2018 amount represents cash STI payments earned by the executive during the year ended 31 December
2018, which are expected to be paid in 2019 and were approved by the Board in February 2019. The 2017 amount
represents cash STI payments earned by the executive during the year ended 31 December 2017, which were paid
in July 2018.
Includes sign-on bonuses, automotive allowances, and reimbursements of financial and tax preparation assistance.
Includes 401(k) plan matching contributions made by the employing entity in the United States.
(4)
(5)
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BOART LONGYEAR 2018 ANNUAL REPORT
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Boart Longyear Limited Annual Report 2018
5.1 SERVICE CONTRACTS AND TERMINATION PROVISIONS
Name and
position held at
the end of the
financial year
Duration
of
contract
Notice
period by
Company
Notice
period by
executive
Chief Executive
Officer
No fixed
term
None
required
180 days
Vice President,
General Counsel
and Company
Secretary
No fixed
term
None
required
90 days
No fixed
term
None
required
90 days
Chief Financial
Officer;
Chief Human
Resources
Officer;
Chief Operating
Officer, Chief
Business
Development
Officer
Termination payments (where these are in addition to
statutory entitlements)
For termination with cause, statutory entitlements only
For termination without cause:
• 12 months’ salary
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
For termination with cause, statutory entitlements only
For termination without cause:
• One month per year of service with a minimum of 12
months and a maximum of 24 months.
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
For termination with cause, statutory entitlements only
For termination without cause:
• 12 months’ salary
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
The executive employment contracts listed above contain a twelve-month non-competition and non-solicitation covenant in the
Company’s favour. The Company may, at its option, extend the term of the covenants upon an executive’s termination of
employment for up to an additional twelve months in exchange for monthly payments of the executive’s base salary for the
term of the extension.
5.2 SPECIAL STRATEGIC RETENTION AWARDS FOR KEY EMPLOYEES (including the KMP)
In March 2016, the Board approved special strategic retention awards to certain key employees that include the KMP. All
awards granted were reduced on a pro-rata basis due to the new MIP plan implemented in 2018. These awards were granted
in the form of cash retention and will vest on the third anniversary of the award. Mr Olsen’s and Mr Closner’s awards of
$550,685 and $77,054, respectively, will vest in March 2019. If the senior executive is terminated for reasons other than for
cause, the award will be prorated (with a minimum of one third the original award value) and remain outstanding and payable
on the original vesting date.
Furthermore, in 2018, the Board approved a one-time additional bonus incentive for certain members of senior leadership. The
performance bonus is payable upon the Company achieving metrics for the fiscal year ending 2020 which are materially above
budget. In the event the Company achieves the performance targets, eligible participants will receive a one-time $200,000
cash payment which would become payable in 2021.All KMP with the exception of the CEO are eligible to participate in this
bonus plan.
______________________________________________________________________________________
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5.3 SHARE HOLDINGS
Shareholdings as at the end of the financial year and activity during the financial year, are as follows:
Balance
1 January
Granted as
remuneration
Received on
exercise of
options/rights
Net other change
during year
Balance
31 December
Balance
held nominally
10,328,767
-
-
-
-
1,966,062
-
-
-
520,871
-
86,285
-
-
-
-
-
-
-
-
-
6,420,233
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,200,000
-
-
-
-
-
-
10,328,767
-
-
-
-
1,966,062
-
9,620,233
-
520,871
-
86,285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2018
Marcus Randolph
Kyle Cruz
Jason Ireland
Lawrence First
James Kern
Gretchen McClain
Robert Smith
Richard Wallman
Eric Waxman
Jeffrey Olsen
Brendan Ryan
Robert Closner
Kari Plaster
Denis Despres
5.4 CASH RIGHTS
Cash rights as at the end of the financial year, and activity during the year, are as follows:
Name
Jeffrey Olsen
Brendan Ryan
Robert Closner
Denis Despres
Grant
date
1-Mar-16
15-Mar-17
15-Mar-17
1-Mar-16
15-Mar-17
1-Sep-16
1-Sep-16
Vesting date
1-Mar-19
15-Mar-20
15-Mar-20
1-Mar-19
15-Mar-20
1-Sep-18
1-Sep-19
15-Mar-17
15-Mar-20
Held at the
beginning of
the financial
year
Number of
Cash Rights
granted as
remuneration
Number of
Cash
Rights
vested
Value of
Cash Rights
vested
US$
550,685
132,755
66,378
77,054
7,965
100,000
100,000
66,378
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
-
-
-
-
-
-
-
-
-
-
Number of
Cash Rights
Value of
Cash
Rights
forfeited
US$
forfeited
-
-
-
-
-
-
-
-
Held at the
end of the
financial year
550,685
132,755
66,378
77,054
7,965
-
100,000
66,378
-
-
-
-
-
-
-
-
Robert Closner holds 126,530 retention share rights as of 31 December 2018. The rights were granted on 1 July 2015 and
vest on 15 March 2019.
Jeffrey Olsen holds 324,204 options which are vested and exercisable as of 31 December 2018. The options vested on 1
April 2017 and will expire on 1 April 2024. The exercise price of each option is AUD $0.32.
6. NON-EXECUTIVE DIRECTORS’ FEE STRUCTURE
Non-executive Directors (NED) are remunerated by a fixed annual base fee with additional fees paid for serving on Board
committees. NED who are also employees of Centerbridge, Ares or Ascribe do not receive any Director fees. The Chairman
may attend any committee meetings but does not receive any additional committee fees in addition to base fees.
The fees are determined within a maximum aggregate fee pool that is approved by shareholders. The approved fee pool limit
is US$2.0 million, which aside from changing the currency exchange rate at the 2015 general meeting has not changed in
quantum since the Company’s initial public offering in 2007. During the financial year, US$1.0 million of the pool was utilised
for non-executive Director fees, being approximately 50% of the fee pool limit.
No shares rights or options vested or were awarded as remuneration in 2018.
______________________________________________________________________________________
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Boart Longyear Limited Annual Report 2018
6.1 COMPONENTS OF NON-EXECUTIVE DIRECTOR REMUNERATION
Component
Explanation
Board fees
Current base fees per annum are:
•
US$160,000 for non-executive Directors other than the Board Chairman and the resident
Australian Directors;
US$300,000 for the Board Chairman; and
AUS$200,000 for the resident Australian Directors.
•
•
Committee fees
Current committee fees for non-executive Directors (other than the Board Chairman) are:
•
•
US$7,500 annually for committee members; and
US$15,000 annually for committee chairs.
Where the Board Chairman sits on a committee, he or she does not receive any additional fee.
Other
fees/benefits
Non-executive Directors are entitled to be reimbursed for all reasonable out-of-pocket expenses
incurred in carrying out their duties, including travel costs. The Board Chairman also is entitled to
reimbursement for office and secretarial support.
Non-executive Directors may also, with the approval of the Board, be paid additional fees for extra
services or special exertions for the benefit of the Company.
Non-executive Directors are not entitled to receive any performance-related remuneration, such as
short-term or long-term incentives.
During the term Mr Randolph serves as the Executive Chairman he is eligible to participate in the
Company’s medical and dental plans.
Compulsory superannuation contributions for Australian-resident non-executive Directors are
included in the base fee and additional committee fees set out above.
Non-executive Directors do not receive any retirement benefits other than statutory superannuation
contributions.
During the term Mr Randolph serves as the Executive Chairman he is eligible to participate in the
Company’s 401(k) retirement plan, including receiving a 3% matching contribution by the Company
up to a maximum of US$8,100 per annum.
Post-
employment
benefits
______________________________________________________________________________________
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6.2 REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of non-executive Directors’ remuneration for the year ended 31 December 2018 and 2017 are set out in the table
below.
Non Executive Directors
Remuneration
US$
Marcus Randolph
2018
2017
Jason Ireland
2018
2017
James Kern
2018
2017
Gretchen McClain
2018
2017
Robert Smith
2018
2017
Richard Wallman
2018
2017
Fees (Including
committee fees)
Superannuation
Contributions
Shares
Total
481,879
538,906
149,671
51,710
167,500
41,875
186,667
138,958
149,725
51,710
157,500
57,083
1,277
8,100
-
166,664
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,500
-
483,156
713,670
149,671
51,710
167,500
41,875
186,667
138,958
149,725
51,710
175,000
57,083
Mr Cruz, Mr First and Mr Waxman are not included in the table above as they are employees of Centerbridge, Ascribe Capital
and Ares Management, respectively, and therefore did not receive Director fees.
Mr Randolph’s remuneration includes director fees of $300,000 and cash salary of $181,879 in 2018. In 2017, he received
director fees of $133,336, cash salary of $360,570 and a performance bonus of $45,000.
Ms McClain was appointed the Lead Independent Director in February 2018. She received an additional $5,000 in committee
fees for the appointment. As of 31 December 2018, she had received $4,167 of this fee.
Mr Wallman elected to receive $17,500 of his fees in shares under the NED plan.
As noted in the 2017 annual report, Bret Clayton, Jonathan Lewinsohn, Jeffrey Long, Rex McLennan, Deborah O’Toole,
Matthew Sheahan and Conor Tochilin resigned from the Board in 2017. Their executive remuneration is available in the 2017
annual report.
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Boart Longyear Limited Annual Report 2018
Board of Directors
A brief summary of the Directors’ work experience and qualifications is as follows.
Marcus Randolph
Marcus Randolph was appointed a Director of the Company and Chair on 23 February 2015. Mr Randolph has served more
than 35 years in the mining industry in a variety of global, senior executive roles. Most recently, he was Chief Executive of
BHP Billiton’s Ferrous and Coal business from July 2007 to September 2013, located in Melbourne, and was a member of
BHP’s Group Management Committee.
Prior to that role, he also held several other senior executive roles at BHP, including as its Chief Organisation Development
Officer, President Diamonds and Specialty Products, Chief Development Officer Minerals and Chief Strategic Officer Minerals.
His earlier career includes Chief Executive Officer, First Dynasty Mines, Mining and Minerals Executive, Rio Tinto Plc, Director
of Acquisitions and Strategy, Kennecott Inc., General Manager Corporacion Minera Nor Peru, Asarco Inc., and various mine
operating positions in the US with Asarco Inc.
Mr Randolph holds a Bachelor of Science degree in Mining Engineering from the Colorado School of Mines in the United
States and also holds a Master’s in Business Administration from Harvard University.
Kyle Cruz
Kyle Cruz was appointed a Director of the Company on 1 September 2017. He is a member of the Remuneration and
Nominations Committee. Mr Cruz is a Senior Managing Director at Centerbridge Partners, L.P., the Company’s largest
shareholder and investor. Prior to joining Centerbridge in 2007, he served as Vice President at Diamond Castle Holdings, a
private equity firm founded by former senior professionals of DLJ Merchant Banking (DLJMB).
Previously, he worked as an Associate at DLJMB and J.W. Childs Associates, a Boston-based private equity firm. He began
his career as an analyst in the Mergers and Acquisitions department of Goldman Sachs.
Mr Cruz holds a B.B.A from the University of Michigan with high distinction, and a Master’s in Business Administration from
the Wharton School of the University of Pennsylvania, with honors.
Jason Ireland
Jason Ireland was appointed a Director of the Company on 1 September 2017. He is a member of the Remuneration and
Nominations Committee. Mr Ireland is the Head of McGrath Nicol’s Advisory Business and is based in Sydney, Australia. He
has over 24 years of experience in strategic reviews and implementation of performance improvement and restructuring
initiatives across a range of industries. In the past five years, he has spent considerable time in the mining services sector,
advising boards and financiers on operations in key mining regions around the world. Prior to joining McGrath Nicol in 2006,
Mr Ireland was a Senior Manager at KPMG.
Mr Ireland holds a Bachelor of Business from Charles Sturt University and is a member of the Institute of Chartered
Accountants in Australia.
James Kern
James Kern was appointed as a Director of the Company on 20 February 2018. He is a member of the Audit, Safety & Risk
Committee. Mr Kern has served as Managing partner of Majestic Ventures 1 LLC, a consulting and investment partnership
focused on early stage growth companies, since 2014, In addition, he currently serves on boards of THL Credit Inc.
(NASDAZ), a middle market lending company, PlaySight Interactive, an Israeli-based sports data analytics business and Basic
Energies Services (NYSE), an oilfield services company.
From 2010 to 2014, Mr Kern was a Managing Director at Nomura Securities, serving as Head of Global Finance Financial
Institution Group (“FIG”) and Specialty Finance Investment Banking for the Americas. He previously served as Managing
Director at J. P. Morgan securities within the FIG practice and was focused on Asset Management and Specialty Finance
clients. From 1994-2008, he was a Senior Managing Director at Bear Stearns, where he held several positions, including
Head of Strategic Finance-FIG, head of Corporate Derivatives and was a founding member of the firm’s Structured Equity
Products group.
Mr Kern has a B.S. from the Marshall School of Business at the University of Southern California.
Gretchen McClain
Gretchen W. McClain was appointed a Director of the Company on 15 November 2015. She is the Chairperson of the
Remuneration and Nominations Committee and is also a member of the Audit, Safety & Risk Committee. She was appointed
the lead Independent Director in February 2018. Ms McClain has more than 25 years of global experience in both Fortune 500
corporations and government service, including serving as founding CEO of an S&P 500 global water technology company,
______________________________________________________________________________________
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BOART LONGYEAR 2018 ANNUAL REPORT
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Xylem Inc., and NASA’s Chief Director of the International Space Station. Ms. McClain brings extensive business,
developmental, strategic and technical expertise having served a broad industrial market. In 2018 Utah Business recognised
her as one of their outstanding director nominees.
McClain serves as a Board of Director for publicly traded companies: AMETEK, Inc., Booz Allen Hamilton Holding Corporation,
and Boart Longyear Limited, and a private family owned business, J.M. Huber Corp and serves as an Advisor to EPIC
Ventures. Through her own consulting practice, she provides leadership and business services to executives, frequently
working with start-up businesses and private equity firms.
She graduated from the University of Utah with a B.S. in Mechanical Engineering and received the University’s prestigious
Founders Award in 2015. McClain was inducted into the Utah Technology Council Hall of Fame and is the first woman to
receive this honor.
Jeffrey Olsen
Jeffrey Olsen was appointed President and Chief Executive Officer on 1 March 2016 after serving as Chief Financial Officer
since 2014. Before joining Boart Longyear, he served as Chief Commercial Officer for Rio Tinto’s Iron & Titanium business
since 2010. Prior to that time, he was Chief Financial Officer for Rio Tinto’s Borax and Minerals divisions for approximately
eight years, and held other financial roles at Rio Tinto. Mr Olsen’s experience also includes financial roles at General Chemical
Corporation and Xerox Corporation in the United States.
Mr Olsen holds a Bachelors of Arts degree from the University of Utah and a Master of Business Administration from the
Simon School of Business at the University of Rochester.
Robert Smith
Robert Smith was appointed a Director of the Company on 1 September 2017. He is a member of the Audit, Safety & Risk
Committee. Mr Smith is a Partner of McGrath Nicol. Based in Melbourne, Australia, he specializes in business restructuring
and performance improvement and has led numerous complex assignments often involving prominent listed entities and/or
multi-lender banking syndicates. Mr. Smith’s experience covers a wide variety of industries, including mining and mining
services, energy, power and utilities, manufacturing, retail, media, information technology and financial services. Prior to
joining McGrath Nicol in 2009, Mr. Smith was an Associate Director in Ernst & Young’s Transaction and Assurance divisions.
Mr. Smith began his career as an accountant with Arthur Andersen.
Mr Smith is a Member of Chartered Accountants Australia and New Zealand, a Member of the Australian Institute of Company
Directors and a Registered Liquidator. He holds a Bachelor of Commerce from the University of Melbourne and a Graduate
Diploma in Applied Finance and Investment.
Richard Wallman
Richard Wallman was appointed a Director of the Company on 1 September 2017 and is Chairperson of the Audit, Safety and
Risk Committee. Mr Wallman’s distinguished career includes senior executive roles in finance, as well as non-executive
director roles at several large, publicly listed US companies. His executive experience includes serving as the Chief Financial
Officer and Senior Vice President at Honeywell International, Inc. and its predecessor, AlliedSignal, from 1995 until his
retirement in 2003. He also has held senior financial positions with the IBM Corporation and Chrysler Corporation and worked
at Ford Motor Company earlier in his career.
Mr Wallman currently is a non-executive director of Roper Technologies, Inc. (NYSE), Charles River Laboratories
International, Inc. (NYSE), Wright Medical Group, Inc. (NASDAQ) and Extended Stay America, Inc (NYSE). Mr Wallman holds
a Bachelor of Engineering degree from Vanderbilt University in the United States and also holds a Master’s in Business
Administration from the University of Chicago.
Eric Waxman
Eric Waxman was appointed a Director of the Company on 29 September 2017. He is a member of the Remuneration and
Nominations Committee. Mr Waxman is a Senior Advisor within Ares Management L.P.’s (“Ares”) Private Equity Group. Mr
Waxman works on both the acquisition and disposition of Ares portfolio assets and assists Ares portfolio companies in dealing
with a range of significant legal issues, including corporate governance, regulatory inquiries and litigation. Prior to joining Ares
in 2016, he was a partner at Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, where he practiced for more than 30
years.
Mr Waxman holds a B.A. from the University of California Los Angeles in Economics and a J.D. from the University of
California Davis School of Law.
______________________________________________________________________________________
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34
Boart Longyear Limited Annual Report 2018
Company Secretaries
Robert Closner
Robert Closner was appointed Vice President, General Counsel in October 2017 and later appointed as Company Secretary
on 7 December 2017. He began his career as an associate at one of the leading law firms in Toronto, Canada and prior to
joining Boart Longyear served as the General Counsel and Corporate Secretary of Ivernia Inc. Since joining the Company in
2008, Mr Closner has served in several key leadership positions for Boart Longyear as Regional General Counsel, most
recently responsible for the Americas where he oversaw compliance matters, provided legal guidance and corporate
commercial support. Prior to his Vice President appointment, Mr Closner held the position of Interim Chief Commercial Officer.
Mr Closner received a Bachelor of Arts in Economics and Political Science from McGill University in Montreal, Quebec and
attained his Juris Doctorate in Law from Queen’s University in Kingston, Ontario.
Philip Mackey
Philip Mackey was appointed Company Secretary on 29 January 2016. He has over three decades of company secretarial
and commercial experience and is a member of the Company Matters’ secretariat team. Previously, he served as Company
Secretary of ASX & SGX dual listed Australand Group Limited and Deputy Company Secretary of AMP Limited. Mr Mackey’s
commercial experience includes appointment as Chief Operating Officer (Specialised Funds) of Babcock & Brown and at
Bressan Group. He is a Fellow of Governance Institute Australia and a Graduate Member of the Australian Institute of
Company Directors.
DIRECTORS’ MEETINGS
The following tables set out for each Director the number of meetings (including meetings of Board committees) held and the
number of meetings attended during the financial year while he/she was a Director or committee member. The tables do not
reflect the Directors’ attendance at committee meetings in an “ex-officio” capacity. The tables also do not reflect special or
informal meetings of the Board or its committees.
Board of
Directors
Remuneration
Audit, Safety
Committee
& Risk Committee
Held
Attended Held
Attended
Held
Attended
Kyle Cruz
Jason Ireland
James Kern
Gretchen McClain
Marcus Randolph
Robert Smith
Richard Wallman
Eric Waxman
Jeffrey Olsen
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
4
5
5
6
6
6
6
6
6
6
6
4
4
4
4
4
4
4
4
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant interest in shares, debentures, and rights or options over shares or
debentures of the Company or a related body corporate as at the date of this report.
Marcus Randolph
Kyle Cruz
Lawrence First
Jason Ireland
James Kern
Gretchen McClain
Jeffrey Olsen
Robert Smith
Richard Wallman
Eric Waxman
Fully paid
ordinary shares
10,328,767
-
-
-
-
1,966,062
520,871
-
9,620,233
-
Rights offering
ordinary shares
Rights and
options
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
10,328,767
-
-
-
-
1,966,062
520,871
-
9,620,233
-
______________________________________________________________________________________
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BOART LONGYEAR 2018 ANNUAL REPORT
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The Board adopted a non-executive Director shareholding guideline which recommends that non-executive Directors acquire
and hold at least 30,000 Company shares within five years of their appointment. The target share amount was established to
be roughly equivalent to one year’s Directors’ fees and was based on the value of the Company shares at the time. The target
shareholding amount may be adjusted from time to time to track movements in the Company’s share price.
GRANTS OF SHARES, RIGHTS OVER SHARES AND OPTIONS GRANTED TO DIRECTORS AND EXECUTIVES
At the Annual General Meeting of Shareholders held in May 2018, Shareholders approved a non-executive director share
purchase plan (the “Plan”) which allows current and future Non-Executive Directors to elect to receive up to 100% of their
director fees in shares in the Company in lieu of cash payments. The election of Non-Executive Directors to receive all or a
portion of their compensation in shares of the Company in lieu of cash pursuant to the plan does not result in any additional
remuneration for the Non-Executive Directors. It is merely a mechanism for the Non-Executive Directors to elect to invest
some of the fees to which they are otherwise entitled in the Company.
Under the terms of the Plan, if a Director elects to participate in the Plan, NED Shares are issued quarterly (or at other
intervals in compliance with insider trading laws and the requirements of the Company’s Securities Trading Policy) at
predetermined dates throughout the year. Following issue, Non-Executive Directors are not able to deal in the shares for a 12
month period. After this period, they will be free to deal in the shares subject to the Company’s Securities Trading Policy and
any minimum shareholding requirements adopted by the Board.
The number of NED Shares to be allocated to Non-Executive Directors who elect to participate in the Plan each quarter is
calculated by dividing the amount of director's fees which the relevant Non-Executive Director has elected to contribute to the
Plan by the arithmetic average of the daily volume weighted average sale price of the Company’s shares sold on ASX on the
ordinary course of trading during the five trading days preceding the issue date of the shares.
During 2018 Mr. Richard Wallman participated in the plan and elected to receive $17,500 of his director compensation paid in
shares (6,420,233 shares).
Shares and rights granted to executives of the Company are included in the Remuneration Report. As detailed more fully in
the Remuneration Report, the Company has at various times in 2009, 2010 and 2014 granted options to former and current
members of senior management. 345,000 of these options granted in June 2009 vested in accordance with their terms and
expired in June 2014, with none having been exercised. 25,000 of these options granted in March 2010 vested in accordance
with their terms and expire in March 2015. 891,561 of these options granted in March and April of 2014 vested in accordance
with their terms and expire in March and April of 2024. No shares or interests have been issued during the financial year as a
result of the exercise of options.
DIRECTORS’ AND OFFICERS’ INTERESTS IN CONTRACTS
Except as noted herein, no contracts involving Directors’ or officers’ interests existed during, or were entered into, since the
end of the financial year other than the transactions detailed in the financial statements.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND AUDITORS
The Directors and officers of the Company are indemnified by the Company to the maximum extent permitted by law against
liabilities incurred in their respective capacities as Directors or officers. In addition, during the financial year, the Company
paid premiums in respect of contracts insuring the Directors and officers of the Company and any related body against
liabilities incurred by them to the extent permitted by the Corporations Act 2001. The insurance contracts prohibit disclosure of
the nature of the liability and the amount of the premium.
The Company has not paid any premiums in respect of any contract insuring Deloitte Touche Tohmatsu against a liability
incurred in the role as an auditor of the Company.
______________________________________________________________________________________
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BOART LONGYEAR 2018 ANNUAL REPORT
36
Boart Longyear Limited Annual Report 2018
EXECTUVE MANAGEMENT TEAM
Jeffrey Olsen
Mr Olsen’s experience and qualifications are summarised on page 34.
Denis Despres
Denis Despres was appointed the Company’s Chief Operating Officer on 6 September 2016. He began his career with Boart
Longyear in 1981 and held various positions with progressive responsibility in the Company’s Drilling Services and Products
divisions over the next 26 years, including as Senior VP, Drilling Services. After leaving Boart Longyear in 2007, Mr Despres
founded his own drilling business, which was acquired by Major Drilling in 2010. He most recently served as Major’s Chief
Operating Officer prior to rejoining Boart Longyear.
Mr Despres studied in Ontario, Canada, and received a diploma in mechanical engineering technology from Algonquin
College, a Bachelor of Engineering from Lakehead University and a Master of Business Administration from Queen’s
University, all of which are in Ontario, Canada.
Brendan Ryan
Brendan Ryan was appointed Chief Financial Officer on 6 September 2016 and late 2018 was appointed Chief Business
Development Officer. Mr Ryan’s experience includes over 24 years within the mining industry, spent predominantly with Rio
Tinto and Shell / Anglo Coal, working in a variety of key commercial and operating roles. Prior to a year working with Private
Equity, Mr Ryan held the role of Global Head of Business Evaluation for Rio Tinto in London where he was accountable for
managing the group capital planning and allocation process. Earlier roles during his 13 years with Rio Tinto included Head of
Business Development for the Rio Tinto Copper & Diamonds Group in London, VP Projects & Expansion at Kennecott Utah
Copper in Salt Lake City, as well as other Business Evaluation and Business Analysis roles in London and Australia.
Mr Ryan holds a Master of Business Administration degree from the University of Oxford, UK as well as a Bachelor of
Engineering (Mining) honors degree from the University of Queensland, Australia.
Robert Closner
Mr Closner’s experience and qualifications are summarised on pages 35.
Kari Plaster
Kari Plaster was appointed Chief Human Resources Officer on 30 October 2017. Most recently, Ms Plaster served as CEO
and Founder of Kindling Potential, a private coaching and consulting business using brain based strategies to help businesses
and people to thrive. Prior to this, Ms Plaster held several senior HR roles within Rio Tinto including General Manager,
Leadership Model; VP HR, HSE Governance and External Relations; and Americas Director, Capability Development. She
has worked in many different locations and businesses including Kennecott Utah Copper, US Borax and Iron Ore Company of
Canada.
Ms Plaster holds a Bachelor of Science Degree from Boise State University in Criminal Justice Administration, and has
designed and attended several senior leadership programs for Rio Tinto in cooperation with Duke’s Corporate Education
Programs.
Miguel Desdin
Miguel Desdin was appointed Chief Financial Officer in January 2019. He relocated from Houston, Texas where he worked for
seven years as CFO and Senior Vice President of TPC Group, a two-billion dollar chemical company. During his tenure, he
helped transition and position the company to take advantage of the cyclical recovery during a downturn in commodity prices.
This included serving as interim CEO during the latter part of 2015. Miguel’s career has led him through several key executive
and financial roles within the industrial chemicals and related industries including working for Furmanite Corporation, Celanese
Corporation, Great Lakes Chemical Corporation, and AlliedSignal, Inc. He earned his MBA in Finance from the Wharton
School at the University of Pennsylvania, and a Bachelor of Science in Industrial and Systems Engineering from the University
of Florida.
______________________________________________________________________________________
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AUDITOR
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 41 of this report.
NON-AUDIT SERVICES
Details of amounts paid or payable for non-audit services provided during the year by the auditor are outlined in Note 8 to the
financial statements.
The auditor of Boart Longyear Limited is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche Tohmatsu
on assignments additional to their audit duties where their expertise and experience with the Company are important. These
assignments principally have been related to tax advice and tax compliance services, the magnitude of which is impacted by
the global reach of the Company.
The Company and its Audit, Safety & Risk Committee (Audit Committee) are committed to ensuring the independence of the
external auditor. Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company
has a formal pre-approval policy that requires the pre-approval of non-audit services by the Chairman of the Audit Committee.
Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit fees without the
approval of the Audit Committee. The Audit Committee believes that the combination of these two approaches results in an
effective procedure to control services performed by the external auditor.
None of the services performed by the auditor undermine the general principles relating to auditor independence as set out in
Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical
Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity
for the Company, acting as an advocate for the Company or jointly sharing economic risks and rewards.
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by another person or firm
on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001 and are of the opinion that the services, as disclosed in Note 8 to the financial statements, do not compromise the
external auditor’s independence.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the financial year.
ROUNDING OF AMOUNTS
Boart Longyear Limited is a company of a kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Report)
Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of
amounts in the Directors’ Report and Financial Report. Amounts in the Directors’ Report and the Financial Report are
presented in US dollars and have been rounded off to the nearest thousand dollars in accordance with that Instrument, unless
otherwise indicated.
______________________________________________________________________________________
38
BOART LONGYEAR 2018 ANNUAL REPORT
38
Boart Longyear Limited Annual Report 2018
REMUNERATION
The Remuneration Report is included beginning at page 19 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
Marcus Randolph
Chairman
26 February 2019
______________________________________________________________________________________
39
39
BOART LONGYEAR 2018 ANNUAL REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
u
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Directors
Boart Longyear Limited 26
Butler Boulevard
Adelaide Airport SA 5650
Australia
26 February 2019
Dear Directors
Boart Longyear Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of Boart Longyear Limited.
As lead audit partner for the audit of the financial statements of Boart Longyear Limited for the financial year ended 31
December 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
__________________________________________________________________________________________
40
BOART LONGYEAR 2018 ANNUAL REPORT
40
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of Boart Longyear Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Boart Longyear Limited (the “Company”) and its subsidiaries (the
“Group”), which comprises the consolidated statement of financial position as at 31 December 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
________________________________________________________________________________________
41
41
BOART LONGYEAR 2018 ANNUAL REPORT
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. These matters were addressed in the context of our audit of
the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matter
Liquidity
As at 31 December 2018, the Group has net
liabilities of $314.9 million and net current
assets of $134.0 million.
The Group continues to manage its liquidity
closely as disclosed in Note 1 to the financial
statements. This requires the achievement of
budgets and cash flow forecasts, which include
assumptions about those future cash flows and
the forecast results, which are inherently
uncertain.
How the scope of our audit responded to the Key
Audit Matter
Our audit procedures included, but were not
limited to:
•
•
•
•
•
•
Assessing
the process undertaken by
management to develop the budget and
cash flow forecasts for the 15 month period
ending 31 March 2020 (‘FY19/FY20’)
Evaluating the key assumptions underlying
the FY18/FY19 budget
Assessing the quantum and timing of
forecast cash
in the FY18/FY19
cashflow forecast
flows
Performing sensitivity analysis on
the
forecast cash flows, with reference to
available cash balances and forecast cash
flows from operating activities
Evaluating performance in the period from
year end to the audit opinion date against
the FY18/FY19 budget
the appropriateness of
Assessing
the
disclosures included in Note 1 to the
financial statements.
Taxation
The Group operates across a large number of
jurisdictions and is subject to periodic
challenges by local tax authorities on a range of
tax matters during the normal course of
business including application of transfer pricing
rules, indirect taxes, and transaction-related
tax matters as disclosed in Notes 11 and 27.
Our procedures performed in conjunction with
relevant tax specialists, included but were not
limited to:
• Obtaining an understanding of the process
that management has taken to determine
the taxation balances recognised in the
financial statements
As at 31 December 2018, the Group has
recorded an income tax benefit of $7.5 million,
current and non-current tax receivables of $0.3
million and $16.3 million, net current tax
payables of $54.6 million and net deferred tax
assets of $3.2 million and has disclosed its
assessment of tax-related contingent liabilities
in Notes 11 and 27.
•
•
Assessing the appropriateness of the
treatment of selected specific transactions
in the Group’s tax expense calculations
Evaluating the appropriateness of
management’s assumptions and estimates
in relation to the likelihood of generating
future taxable income to support the
recognition of deferred income tax assets
with reference to forecast taxable income
BOART LONGYEAR 2018 ANNUAL REPORT
42
As disclosed in Note 11, the Group is under a
tax audit in Canada.
The above matters give rise to complexity and
uncertainty in respect of the determination of
income taxes, deferred income tax assets as
well as the consideration of contingent liabilities
associated with tax years open to audit. This
requires significant judgement in estimating tax
exposures and/or contingent liabilities.
•
•
•
Evaluating the consistency of the forecast
used by management to derive forecast
taxable income to support the recognition
of deferred tax assets against the forecast
used for assessing the carrying value of
intangible assets and property, plant and
equipment
Challenging and evaluating management’s
assessment of uncertain tax positions
including contingent liabilities and
conclusions on complex tax arrangements
through enquiries of the Group Taxation
department, obtaining and considering the
Group’s correspondence with local tax
authorities and advice received from third
parties
Assessing the appropriateness of the
Group’s Note disclosures regarding current
and deferred taxes, uncertain tax positions
and tax-related contingencies in the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that
________________________________________________________________________________________
43
43
BOART LONGYEAR 2018 ANNUAL REPORT
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
________________________________________________________________________________________
44
BOART LONGYEAR 2018 ANNUAL REPORT
44
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 19 to 39 of the Directors’ Report for the year
ended 31 December 2018.
In our opinion, the Remuneration Report of Boart Longyear Limited, for the year ended 31 December 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Perth, 26 February 2019
________________________________________________________________________________________
45
45
BOART LONGYEAR 2018 ANNUAL REPORT
Boart Longyear Limited Annual Report 2018
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
(c)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable;
in the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting
Standards, as stated in Note 1 to the financial statements;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards, and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(d)
the Directors have been given the declarations required by section 295A of the Corporations Act 2001.
The Directors draw the reader’s attention to Note 1 on page 53 concerning the going concern basis of preparation of the
financial report.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
Marcus Randolph
Chairman
26 February 2019
________________________________________________________________________________________
46
BOART LONGYEAR 2018 ANNUAL REPORT
46
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
Continuing operations
Revenue
Cost of goods sold
Gross margin
Other income
General and administrative expenses
Sales and marketing expenses
Other expenses
Operating profit / (loss)
Interest income
Finance costs
Loss before taxation
Note
2018
US$'000
2017
US$'000
3
4
4
5
5
770,167
(639,100) 1
131,067
1
1
10,360
(80,634)
(22,138)
(21,080)
17,575
889
(69,482)
(51,018)
739,063
(628,461)
1
110,602
1
1
6,637
(152,858)
(27,449)
(24,679)
(87,747)
1,783
(57,155)
(143,119)
Income tax benefit / (expense)
11
7,495
(6,925)
Loss for the year attributable
to equity holders of the parent
Loss per share:
Basic loss per share
(43,523)
(150,044)
12
(0.2) cents
(1.6) cents
Other comprehensive loss
Loss for the year attributable to equity holders of the parent
Items that may be reclassified subsequently to profit or loss
Exchange gain (loss) arising on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss
Actuarial gain related to defined benefit plans
Income tax on income and expense recognised directly through equity
Other comprehensive loss for the year, net of tax
23
Total comprehensive loss for the year attributed
to equity holders of the parent
(43,523)
(150,044)
(15,121)
18,543
414
(104)
(14,811)
7,791
(752)
25,582
(58,334)
(124,462)
(1) In the current period significant items have not been separately presented but have been included in the relevant line items. Details of items
considered to be significant are included in Note 7.
See accompanying Notes to the Consolidated Financial Statements included on pages 52 to 104.
_______________________________________________________________________________________
47
47
BOART LONGYEAR 2018 ANNUAL REPORT
Consolidated Statement of Financial Position
As at 31 December 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of 31 December 2018
BOART LONGYEAR LIMITED
Note
2018
US$'000
2017
US$'000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivable
Prepaid expenses and other assets
Asset classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Non-current tax receivable
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current tax payable
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Reserves
Other equity
Accumulated losses
Total deficiency in equity
Non-controlling interest
Total equity
31
13
14
11
16
17
18
19
11
11
20
22
11
21
21
11
22
24
38,942
119,582
165,410
268
12,813
337,015
467
337,482
114,098
103,859
37,763
20,709
16,284
6,975
299,688
637,170
111,198
19,891
71,194
1,183
203,466
720,268
17,502
10,792
748,562
952,028
(314,858)
1,468,776
(116,231)
(137,182)
(1,532,651)
(317,288)
2,430
(314,858)
43,758
131,861
174,375
1,657
13,749
365,400
530
365,930
118,130
101,196
34,109
20,597
18,033
15,134
307,199
673,129
138,248
19,451
99,590
794
258,083
641,884
13,439
18,720
674,043
932,126
(258,997)
1,468,758
(101,135)
(137,182)
(1,489,438)
(258,997)
-
(258,997)
See accompanying Notes to the Consolidated Financial Statements included on pages 52 to 104.
_______________________________________________________________________________________
48
BOART LONGYEAR 2018 ANNUAL REPORT
48
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49
BOART LONGYEAR 2018 ANNUAL REPORT
BOART LONGYEAR LIMITED
Note
2018
US$'000
2017
US$'000
(43,523)
(150,044)
Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
Cash flows from operating activities
Loss for the year
Adjustments provided by operating activities:
Income tax (benefit)/expense recognised in profit
Finance costs recognised in profit
Depreciation and amortisation
Interest income recognised in profit
Gain on sale or disposal of non-current assets
Other non-cash items
Shares issued to directors
Impairment of current and non-current assets
Non-cash foreign exchange (gain)/loss
Equity-settled share-based payments
Long-term compensation - cash rights
Changes in net assets and liabilities, net of effects
from acquisition and disposal of business:
(Increase) decrease in assets:
Trade and other receivables
Inventories
Other assets
(Decrease) increase in liabilities:
Trade and other payables
Provisions
Cash (used in) provided by operations
5
6
5
6
6b, 10
6b
Interest paid
Interest received
Income taxes paid
Net cash flows generated/used in operating activities
5
(7,495)
69,482
36,587
(889)
(7,794)
(17,135)
18
11,493
2,062
25
-
3,037
4,023
(980)
(18,944)
(5,818)
24,149
(6,095)
889
(15,231)
3,712
6,925
57,155
51,108
(1,783)
(4,385)
(15,235)
485
2,175
(4,162)
2,457
2,178
(19,041)
12,672
(2,680)
18,323
3,444
(40,408)
(7,384)
1,783
(8,006)
(54,015)
See accompanying Notes to the Consolidated Financial Statements included on pages 52 to 104.
____________________________________________________________________________________
50
BOART LONGYEAR 2018 ANNUAL REPORT
50
Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
Note
2018
US$'000
2017
US$'000
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Intangible costs paid
Investment in unaffiliated companies
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issuance of shares
Payments for debt issuance costs
Proceeds from borrowings
Repayment of borrowings
Net cash flows provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance
of cash held in foreign currencies
Cash and cash equivalents at the end of the year
31
(37,095)
13,738
(2,016)
-
(25,373)
-
-
16,964
(5,345)
11,619
(10,042)
43,758
5,226
38,942
(25,501)
13,791
(2,850)
(859)
(15,419)
4,464
(2,550)
96,071
(51,594)
46,391
(23,043)
59,343
7,458
43,758
See accompanying Notes to the Consolidated Financial Statements included on pages 52 to 104.
_______________________________________________________________________________________
51
BOART LONGYEAR 2018 ANNUAL REPORT
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
1. GENERAL INFORMATION
BOART LONGYEAR LIMITED
Boart Longyear Limited (the “Parent”) is a public company listed on the Australian Securities Exchange Limited (ASX)
and is incorporated in Australia. Boart Longyear Limited and subsidiaries (collectively referred to as the “Company”)
operate in four geographic regions, which are defined as North America, Latin America, Asia Pacific, and Europe/Africa
(EMEA).
Boart Longyear Limited’s registered office and its principal place of business are as follows:
Registered office
26 Butler Boulevard
Burbridge Business Park
Adelaide Airport, SA 5650
Tel: +61 (8) 8375 8375
Basis of Preparation
Principal place of business
2455 South 3600 West
Salt Lake City, Utah 84119
United States of America
Tel: +1 (801) 972 6430
This financial report is a general purpose financial report which:
- has been prepared in accordance with the requirements of applicable accounting standards including Australian
interpretations and the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other
requirements of the law. Accounting Standards include Australian Accounting Standards. Compliance with
Australian Accounting Standards ensures that the financial statements and notes of the Company comply with
IFRS. The financial report includes the consolidated financial statements of the Company. For purposes of
preparing the consolidated financial statements, the Company is a for-profit entity;
-
is presented in United States dollars, which is Boart Longyear Limited’s functional and presentation currency. All
values have been rounded to the nearest thousand dollars (US’000) unless otherwise stated, in accordance with
ASIC Corporations (Rounding in Financial/Directors’ Reports) instrument 2016/191. The financial statements were
authorised for issue by the Directors on 26 February 2019;
- applies Accounting policies in a manner which ensures that the resulting financial information satisfies the concepts
of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is
reported. These accounting policies have been consistently applied by each entity in the Company;
-
is prepared by combining the financial statements of all of the entities that comprise the consolidated entity, Boart
Longyear Limited and subsidiaries as defined in AASB 10 ‘Consolidated Financial Statements’. Consistent
accounting policies are applied by each entity and in the preparation and presentation of the consolidated financial
statements; Subsidiaries are all entities for which the Company (a) has power over the investee (b) is exposed or
has rights, to variable returns from involvement with the investee and (c) has the ability to use its power to affect its
return. All three of these criteria must be met for the Company to have control over the investee. Subsidiaries are
fully consolidated from the date on which control is transferred to the Company until such time as the Company
ceases to control such entity.
- all inter-company balances and transactions, and unrealised income and expenses arising from inter-company
transactions, are eliminated.
- adopted AASB 15 Revenue from Contracts from Customers and AASB 9 Financial Instruments. The accounting
policies been updated for changes resulting from the adoption of those tow standards. Refer to Note 33 for further
details on the changes in accounting policies.
- does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet
effective. Refer to Note 33 for further details.
The financial report has been prepared on a historical cost basis, except for the revaluation of certain financial
instruments that are stated at fair value. Cost is based on fair values of the consideration given in exchange for assets.
The financial report has also been prepared on the basis that the Company is a going concern, which assumes
continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary
course of business.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
52
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
1. GENERAL INFORMATION (CONTINUED)
Going Concern
BOART LONGYEAR LIMITED
The financial report has been prepared on a going concern basis, which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business.
At 31 December 2018, the Company has net liabilities of $314.9 million (2017: net liabilities of $259.0 million). The
increase in net liabilities is mainly a result of accreted interest on long-term debt. At 31 December 2018 the Company
has net current assets of $134.0 million (2017: $107.8 million as at 31 December).
In preparing the financial report, the Directors have made an assessment of the ability of the Company to continue as a
going concern. The Company’s ability to meet its ongoing operational and financing obligations requires the Company
to achieve its forecast cash flows by sustaining previously implemented cost reductions, realise cost savings from
ongoing and future cost-reduction and actively managing cash flows. The Directors reaffirm that current and expected
operating cash flow, cash on hand and available drawings under the Company’s asset-based loan facility provide
sufficient liquidity to meet its debts as and when they fall due.
Cash flow Forecasts
The Company has prepared detailed cash flow forecasts which incorporate the financial impact of continued actions to
address the market environment. In preparing the cash flow forecasts the Company has used best estimate
assumptions. The Directors have assessed the Company’s cash flow forecasts and revenue projections based on
current market conditions and on results achieved to date attributable to ongoing cash-generating actions as well as
continuing to evaluate risks and opportunities to this best estimate. Some of the key assumptions underpinning the
cash flow forecasts and revenue projections are inherently uncertain and are subject to variation due to factors which
are outside the control of the Company. The key assumptions are discussed below.
Market risk
The Company experienced significant declines in financial performance through mid-2016, as a result of declining
demand for, and global oversupply of, the Company’s services and products. This decline was driven by the global
contraction in exploration and development spending across the commodities sector and by mining customers in
particular. We have seen an improvement in the market through 2017 and into 2018; however, despite recent
improvements in the market, and increasing revenues, mineral exploration, production and development activities and
contract pricing could remain at depressed levels for an extended period of time or decline, resulting in adverse effects
on the Company’s operating results, liquidity and financial condition.
Operational risk
In response to the recent improvements in the market, the company is seeing higher working capital demand.
to meet these working capital and payment obligations, the Company has implemented significant cost savings and
cash management initiatives. These initiatives are aggressively managing fixed, variable and capital costs and, in
particular, improving operational efficiencies and commercial practices.
In order
The cash flow forecasts assume that the Company is able to maintain and improve on current volumes of work, sustain
previously implemented reductions and realise additional cost savings from both ongoing and future cost-reduction and
efficiency initiatives.
Other key assumptions
The cash flow forecasts also include a number of other key assumptions, in particular:
•
•
assumptions relating to the timing and outcome of the tax audits detailed in Note 11 of the financial statements,
that the US dollar remains consistent with current levels, particularly in relation to the Australian and Canadian
dollars.
Notwithstanding the uncertainties set out above, the Directors believe at the date of signing of the financial report that
there are reasonable grounds to continue to prepare the financial report on the going concern basis.
53
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
1. GENERAL INFORMATION (CONTINUED)
Key Judgements and Estimates
BOART LONGYEAR LIMITED
In applying Australian Accounting Standards, management is required to make judgments, estimates and form
assumptions that affect the application of accounting policies and reported amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the financial statements, and the reported revenue and expenses
during the periods presented herein. On an ongoing basis, management evaluates its judgments and estimates in
relation to asset, liabilities, contingent liabilities, revenues and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the respective periods in which they are revised if only those periods are affected, or in the respective
periods of the revisions as well as future periods if the revision affects both current and future periods.
The key judgments, estimates and assumptions that have or could have the most significant effect on the amounts
recognised in the financial statements, are found in the following notes:
Note 1
Note 11
Note 18
Note 27
Going Concern
Income Tax
Goodwill and Other Asset Impairment Considerations
Contingent Liabilities
Foreign Currency
The Company’s presentation currency is the US dollar. The financial statements of the Company and its subsidiaries
have been translated into US dollars using the exchange rates at each balance sheet date for assets and liabilities and
at an average exchange rates for revenue and expenses throughout the period. The effects of exchange rate
fluctuations on the translation of assets and liabilities are recorded as movements in the foreign currency translation
reserve (“FCTR”).
The Company determines the functional currency of its subsidiaries based on the currency used in their primary
economic environment, and, as such, foreign currency translation adjustments are recorded in the FCTR for those
subsidiaries with a functional currency different from the US dollar. The cumulative currency translation is transferred
to the income statement when a subsidiary is disposed of or liquidated.
Transaction gains and losses, and unrealised translation gains and losses on short-term inter-company and operating
receivables and payables denominated in a currency other than the functional currency, are included in other income
or other expenses in profit or loss. Where an inter-company balance is, in substance, part of the Company’s net
investment in an entity, exchange gains and losses on that balance are taken to the FCTR.
Other Accounting Policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
54
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
2. SEGMENT REPORTING
BOART LONGYEAR LIMITED
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance is based on the Company’s two general operating activities: Global Drilling Services and Global
Products. The Global Drilling Services segment provides a broad range of drilling services to companies in mining,
energy and other industries. The Global Products segment manufactures and sells drilling equipment and performance
tooling to customers in the drilling services and mining industries.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Company’s accounting policies. Segment profit shown below is consistent with the income reported to the
chief operation decision maker for the purposes of resource allocation and assessment of segment performance.
Segment profit represents earnings before interest and taxes.
Segment revenue and results
Global Drilling Services
533,606
500,583
Segment Revenue
2018
US$'000
2017
US$'000
Segment Profit
2018
US$'000
57,137
2017
US$'000
36,395
Global Products revenue
Products third party revenue
Products inter-segment revenue 1
Total Global Products
Less Global Product sales to Global Drilling Services
Total third party revenue
Total segment profit
Unallocated costs 2
Significant items
Finance costs
Interest income
Loss before taxation
236,561
56,021
238,480
54,507
292,582
(56,021)
770,167
292,987
23,493
2,803
(54,507)
739,063
80,630
39,198
(36,554)
(26,501)
(69,482)
889
(51,018)
(47,259)
(79,686)
(57,155)
1,783
(143,119)
(1) Transactions between segments are carried out at arm's length and are eliminated on consolidation.
(2) Unallocated costs include corporate general and administrative costs, as well as, other expense items such as foreign
exchange gains or losses.
Other segment information
Depreciation and amortisation
of segment assets
2018
US$'000
2017
US$'000
Additions to non-current
assets 2
2018
US$'000
2017
US$'000
25,768
7,175
32,943
3,644
36,587
32,663
8,599
41,262
9,846
51,108
27,932
3,013
30,945
10,427
41,372
20,805
3,904
24,709
5,657
30,366
Global Drilling Services
Global Products
Total of all segments
Unallocated 1
Total
(1) Unallocated additions to non-current assets relate to the acquisition of general corporate assets such as software and hardware.
(2) Non-current assets excluding deferred tax assets.
55
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
2. SEGMENT REPORTING (CONTINUED)
Geographic information
BOART LONGYEAR LIMITED
The Company’s two business segments operate in four principal geographic areas – North America, Asia Pacific,
Latin America and EMEA. The Company’s revenue from external customers and information about its segment
assets by geographical locations are detailed below:
Revenue from
external customers
2018
US$'000
2017
US$'000
353,206
169,031
110,066
137,864
770,167
338,818
156,502
108,627
135,116
739,063
Non-current assets 1
2018
2017
US$'000
US$'000
201,767
39,922
18,349
18,941
278,979
210,440
45,476
23,054
7,632
286,602
North America
Asia Pacific
Latin America
EMEA
Total
(1) Non-current assets excluding deferred tax assets.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
56
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
3. REVENUE
BOART LONGYEAR LIMITED
Boart Longyear operates two different business units throughout various geographical locations – Global Drilling
Services and Global Drilling Products.
Global Drilling Services
The Company performs various types of drilling services within the mining and minerals industry. Contracts entered
into can cover services which involve different processes and continuous drilling services activities in a sequential set
of mobilisation, drilling, and demobilisation activities which are invoiced to the customer as those activities progress.
These processes and activities are highly inter-related and the Company provides a significant service of integration
of such activities. Where this is the case, these activities and processes are accounted for as one performance
obligation.
Revenue from services rendered is recognised in the statement of profit and loss and other comprehensive income
over time. Boart Longyear has a contractual right to consideration from a customer for an amount that corresponds
directly with the value to the customer of the performance completed to date (for example, number of meters drilled).
As a result, Boart Longyear applies the practical expedient under AASB15.B16 to recognise revenue at the amount
which it has the right to invoice.
Customers are invoiced on a fortnightly basis and revenue is recognised in the accounting period in which the right to
invoice is obtained. Payment is received following invoice according to standard payment terms, which are generally
between 30 to 60 days. There are no significant financing components. Most drilling services contracts do not include
variable payment terms. Where variable payment terms exist these are usually in the form of penalties for late
completion. Variable consideration is only recognised to the extent that it is considered highly probable that such
amounts will not reverse in the future and is estimated using the expected value approach.
Global Drilling Products
The Company manufactures, distributes and sells equipment that is necessary for the mining and mineral industry.
Sales orders are completed across multiple geographies for products, such as large drill rigs and drilling components
such as bits and coring rods. Each product promised to the customer is distinct under the contract according to
AASB15.27 and gives rise to a separate performance obligation. Revenue is recognised when control of the products
has transferred to the customer. Transfer of control happens at the point the products are delivered to the customer
for drilling rigs and at the point the products are shipped to the customer’s specific location for drilling components.
The transaction price is allocated to each product on stand-alone basis.
Payment is received following invoice according to standard payment terms, which are generally between 30 to 60
days. There are no significant financing components and there is no significant reversal of variable consideration
expected at the point of revenue recognition.
The components of revenue are as follows:
Revenue from the rendering of services
Revenue from the sale of goods
2018
US$'000
533,606
236,561
770,167
2017
US$'000
500,583
238,480
739,063
There were no customer(s) that contributed 10% or more to the Company’s revenue in 2018 and 2017.
57
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
4. OTHER INCOME / EXPENSE
The components of other income are as follows:
Gain on disposal of property, plant and equipment
Gain on disposal of scrap
Other
The components of other expense are as follows:
Amortisation of intangible assets
VAT write-off
Loss on foreign currency exchange differences
Impairment of fixed assets
Environmental fees
Other
Total other expenses
5.
INTEREST INCOME / FINANCE COSTS
Interest income is as follows:
Interest income:
Bank deposits
Finance costs are as follows:
Finance costs:
Interest on loans and bank overdrafts
Amortisation of debt issuance costs
Interest on obligations under finance leases
Total finance costs
Finance costs due to debt repayment:
Write-off of debt issuance costs
BOART LONGYEAR LIMITED
2018
US$'000
2017
US$'000
7,794
326
2,240
10,360
4,385
805
1,447
6,637
2018
US$'000
2017
US$'000
4,216
2,938
11,615
79
24
2,208
21,080
10,657
3,323
6,564
1,936
1,179
1,020
24,679
2018
US$'000
2017
US$'000
889
1,783
2018
US$'000
2017
US$'000
67,432
1,902
148
69,482
-
-
52,243
2,012
60
54,315
2,840
2,840
Total finance costs
69,482
57,155
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
58
58
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
6. LOSS FOR THE YEAR
Loss for the year includes the following:
(a)
Gains and losses
Loss for the year includes the following gains and (losses):
BOART LONGYEAR LIMITED
Gain on disposal of property,
plant and equipment
2018
US$'000
2017
US$'000
7,794
4,385
Net foreign exchange losses
(11,615)
(6,564)
Bad debt expense, net of reversals
(228)
(1,343)
(b)
Employee benefits expenses
Salaries and wages
Post-employment benefits:
Defined contribution plans
Defined benefit plans
Long-term incentive plans:
Equity-settled share-based payments
Cash rights compensation
Termination benefits
Other employee benefits 1
2018
US$'000
2017
US$'000
(244,925)
(244,119)
(6,411)
(1,507)
(25)
-
(3,164)
(66,944)
(322,976)
(5,751)
(1,902)
(2,457)
(2,178)
(11,625)
(69,827)
(337,859)
(1) Other employee benefits include items such as medical benefits, workers’ compensation, other fringe benefits
and state taxes.
(c)
Other
Depreciation of non-current assets
Amortisation of non-current assets
Operating lease rental expense
2018
US$'000
2017
US$'000
(31,129)
(5,446)
(25,696)
(39,236)
(11,872)
(15,753)
_______________________________________________________________________________________
59
BOART LONGYEAR 2018 ANNUAL REPORT
59
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
7. SIGNIFICANT ITEMS
BOART LONGYEAR LIMITED
During 2018, the Company continued to reduce operating costs through a series of restructuring activities. The
Company’s restructuring efforts included:
•
•
•
•
controlling SG&A and other overhead related costs;
exiting certain loss-making drilling services project or territories;
leveraging the supply chain function across the business, and
focusing on operational efficiencies and productivity at the drill rig level and across the global
organisation.
The Company has incurred costs related to cost-reduction plans. These costs include employee separations, exiting
leased facilities, impairments of plant and equipment and inventories, and professional fees related to resizing the
business.
Significant items for the years ended 31 December 2018 and 2017 are, as follows:
Recapitalisation costs 1
Impairments:
Equipment
Intangible assets
Inventories
Employee and related costs 2
Other restructuring costs 3
Onerous leases
Net of tax 4
2018
US$'000
2017
US$'000
-
44
-
10,941
2,601
12,915
-
26,501
26,099
50,471
136
26
-
15,116
12,175
1,762
79,686
78,931
(1) Recapitalisation costs include fees for legal, finance and other advisory services.
(2) Employee and related costs include separation costs, retention and other employee-related costs.
(3) Other restructuring costs include fees and other advisory costs for business and operational improvement initiatives.
(4) The tax effect was calculated using the applicable local country tax rates before application of excess of net operating
losses. The net operating losses were largely not benefitted.
Classification of significant items on the income statement for the years ended 31 December 2018 and 2017 are, as
follows:
General and administrative expenses
Cost of goods sold
Research and development
Sales and marketing expenses
2018
US$'000
2017
US$'000
14,493
11,242
266
500
26,501
76,511
2,669
189
317
79,686
Significant items for the years ended 31 December 2018 and 2017 by business segment are, as follows:
Global Drilling Services1
Global Products
Unallocated2
2018
US$'000
2017
US$'000
8,566
10,513
7,422
26,501
6,320
5,316
68,050
79,686
(1) Transactions between segments are carried out at arm’s length and are eliminated in consolidation.
(2) Unallocated costs include corporate general and administrative costs, as well as, other expense items such as foreign
exchange gains or losses and recapitalisation costs.
_______________________________________________________________________________________
60
BOART LONGYEAR 2018 ANNUAL REPORT
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
8. REMUNERATION OF AUDITORS
Company auditor's remuneration
Audit and review of the financial report:
Auditor of the parent entity
Related practices of the parent entity auditor
Non-audit services:
Tax Compliance
Tax Services
BOART LONGYEAR LIMITED
2018
US$'000
2017
US$'000
835
757
1,592
429
427
856
974
927
1,901
449
308
757
Total remuneration to Company auditor
2,448
2,658
Remuneration to other accounting firms
Audit services
Non-audit services:
Tax services
Professional services
Global mobility
Accounting and payroll services
Other
Total remuneration to other accounting firms
264
2,326
1,944
101
402
292
5,329
229
2,116
-
196
363
105
3,009
Boart Longyear Limited’s auditor is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche
Tohmatsu on assignments in addition to their audit duties where their expertise and experience with the Company are
important. These assignments principally have been related to tax advice and tax compliance services, the
magnitude of which is impacted by the global reach of the Company.
The Board and its Audit, Safety & Risk Committee are committed to ensuring the independence of the external
auditor. Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company
has a formal pre-approval policy which requires the pre-approval of non-audit services by the Chairman of the Audit
Committee. Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit
fees without the approval of the Audit Committee. The Audit Committee believes that the combination of these two
approaches results in an effective procedure to pre-approve services performed by the external auditor.
61
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BOART LONGYEAR 2018 ANNUAL REPORT
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
9. KEY MANAGEMENT PERSONNEL COMPENSATION
BOART LONGYEAR LIMITED
The aggregate compensation made to key management personnel of the Company is set out below.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
10. EMPLOYEE LONG TERM INCENTIVE PAYMENTS
2018
US$'000
2017
US$'000
4,989
28
67
18
5,101
4,892
65
430
1,899
7,286
On 31 December 2017 the Long Term Incentive Plan (LTIP) and Retention Incentive Grant Agreement (RIGA)
programs ceased. Retention based awards, under LTIP, were calculated on a pro-rata basis as of 31 December
2017 and will be paid on the original payment date as per the award agreement. Performance based awards and
stock option plans, under the LTIP, were cancelled as of 31 December 2017.
Effective 1 January 2018 the Board approved a resolution to introduce a long-term incentive plan, the Management
Incentive Plan (“MIP”).
The MIP is a long-term incentive plan, which is similar in design to a stock option plan, and consistent with many
incentive plans in private equity, in that it allows participants to share in the gain of Boart Longyear’s value over time.
The MIP was created to give senior leaders an opportunity to share in the growth and value of Boart Longyear’s
business success.
The executives eligible to participate in the MIP are senior management and corporate executives, including the KMP.
The percentage of the MIP payouts vary depending on the participant’s position, skills and contributions to the
Company. The percentage amounts are generally based on market averages for comparable roles at similar-sized
companies.
There are both time and performance vesting hurdles in the MIP. The time vesting portion of the MIP represents
33.3% of the plan and is spread over a 5-year time window.
The performance portion of the MIP is based on Boart Longyear’s gain in Total Enterprise Value (TEV), which has
been set at a baseline of $650 million.
The MIP has two performance vesting criteria; one set at $900M TEV, representing 33.3% of the award and the other
set at $1.1B TEV, which represents the final 33.3% of the award.
Upon sale of ownership at certain predetermined levels, TEV will be measured and if the critieria are met, business
leaders will be paid a percentage of the value based on their MIP allocation.
No trigger event took place in 2018, so no amount was recorded in the financial statements at 31 December 2018.
The MIP will be paid in either cash or shares at the discretion of the Board.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
62
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
11.
INCOME TAXES
Income Taxes
The Company is subject to income taxes in Australia and other jurisdictions around the world in which the Company
operates. Significant judgment is required in determining the Company’s current tax assets and liabilities. Judgments
are required about the application of income tax legislation and its interaction with income tax accounting principles.
Tax positions taken by the Company are subject to challenge and audit by various income tax authorities in
jurisdictions in which the group operates.
Judgment is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised
on the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses, foreign
tax credits and temporary differences, are recognised only where it is considered more likely than not that they will be
recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the
generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future
cash flows.
These judgments and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in
circumstances will alter expectations, which may impact the amount of deferred tax assets and tax liabilities
recognised on the balance sheet. In such circumstances, some or all of the carrying amount of recognised deferred
tax assets and tax liabilities may require adjustment, resulting in a corresponding credit or charge to the income
statement.
Current and deferred taxation
Income tax expense includes current and deferred tax expense (benefit) and is recognised in profit or loss except to
the extent that 1) amounts relate to items recognised directly in equity, in which case the income tax expense (benefit)
is also recognised in equity, or 2) amounts that relate to a business combination, in which case the income tax
expense (benefit) is recognised in goodwill.
Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the
reporting date, and any adjustment to tax payable in respect of previous years. Management periodically evaluates
provisions taken in tax returns with respect to situations in which applicable tax regulation is open to interpretation.
The Company establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided on all temporary differences for which transactions or events that result in an
obligation to pay more tax in the future or a right to pay less tax in the future have occurred but have not reversed at
the balance sheet date. Temporary differences are differences between the Company’s taxable income and its profit
before taxation, as reflected in profit or loss, that arise from the inclusion of profits and losses in tax assessments in
periods different from those in which they are recognised in profit or loss.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they likely will
not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets are regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying temporary differences can be deducted. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to all or
part of the deferred tax asset to be realised.
United States of America Tax Cuts and Jobs Act
In the United States, the Tax Cuts and Jobs Act (the Tax Act) was signed into law on 22 December 2017. The Tax Act
changed many aspects of U.S. corporate income taxation and included a reduction of the corporate income tax rate
from 35% to 21%, and an imposition of a tax on deemed repatriated earnings of foreign subsidiaries. The Company
recognized the tax effects of the Tax Act in the year ended December 31, 2017 and recorded a $5.0 million tax benefit
relating primarily to the remeasurement of deferred tax items to the 21% tax rate.
63
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
11.
INCOME TAXES (CONTINUED)
Tax consolidation
The Company includes tax consolidated groups for the entities incorporated in Australia and the United States. The
Parent Entity and its wholly-owned Australian resident entities are part of the same tax-consolidated group and are
therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Boart Longyear
Limited. Companies within the US group also form a tax-consolidated group within the United States.
Tax expense (benefit) and deferred tax assets/liabilities arising from temporary differences of the members of each
tax-consolidated group are recognised in the separate financial statements of the members of that tax-consolidated
group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate
financial statements of each entity. Tax credits of each member of the tax-consolidated group are recognised by the
head entity in that tax-consolidated group.
Entities within the Australian tax-consolidated group have entered into tax-funding arrangements with the head entity.
Under the terms of the tax-funding arrangements, the tax-consolidated groups and each of the entities within the tax-
consolidated group agrees to pay a tax equivalent payment to or from the head entity, based on the current tax
liability or current tax asset of the entity. Such amounts are reflected in amounts receivable or payable to other
entities in the tax-consolidated group.
(a)
Income tax (benefit)/expense is comprised of:
Income tax (benefit)/expense:
Current tax (benefit)/expense
Adjustments recognised in the current year
in relation to the current tax of prior years
Deferred tax (benefit)/expense
2018
US$'000
2017
US$'000
(5,585)
13,199
(1,920)
10
(7,495)
664
(6,938)
6,925
(b) Reconciliation of the prima facie income tax expense on pre-tax accounting profit to the income tax
expense in the financial statements:
Loss before taxation
Income tax benefit calculated at
Australian rate of 30%
Impact of Non-Australia Tax Rates
Change In Deferred taxes as result US Tax Law Change 1
Net non-deductible/non-assessable items other
Net Unrecognised tax losses and tax credits for the current year 2
Recognition of deferred tax assets arising in prior years
Other 3
(Over) / under provision from prior years
Income tax (benefit)/expense per the Consolidated
(51,018)
(143,119)
(15,305)
(2,292)
-
13,166
23,452
(6,168)
(18,428)
(5,575)
(1,920)
(42,936)
3,313
(5,020)
7,817
46,596
(3,648)
139
6,261
664
Statement of Profit or Loss and Other Comprehensive Income
(7,495)
6,925
(1) On 22 December 2017, the United States of America (“US”) enacted the Tax Cuts and Jobs Act (the “TCJA”). Among
other things, the TCJA reduces the US federal corporate tax rate from 35% to 21% percent effective on 1 January 2018.
The combined federal and state statutory tax rate for the Company’s US subsidiaries for the measurement of deferred
taxes for 2018 has been estimated at 25%. The Group will continue to monitor various US state law changes in reaction to
the TCJA as changes are enacted.
(2) Due to the group being in a tax loss position in many jurisdictions during the current financial year, the Company has not
recognised a tax benefit for current period losses.
(3) The majority of this adjustment relates to effectively settling a portion of the disputes in the Canada Revenue Agency tax
audit for tax years 2007-2012 (See the Canadian income tax audits section on page 68).
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
64
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
11. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
(c) Income tax recognised directly in equity during the period
The following current and deferred amounts were (charged) credited directly to equity during the year:
Deferred tax recognised in equity:
Actuarial movements on defined benefit plans
(d) Tax assets and liabilities
Tax assets:
Income tax receivable attributable to:
Parent
Other entities in the tax consolidated group
Other entities
Current tax liabilities:
Income tax payable attributable to:
Parent
Entities other than parent
and entities in the consolidated group
(e) Deferred tax balances
Deferred tax comprises:
Temporary differences
Unused tax losses and credits
2018
US$'000
2017
US$'000
(104)
(752)
(97,271)
97,271
16,552
16,552
1
1,398
69,796
71,194
(91,015)
91,015
19,690
19,690
-
99,590
99,590
(5,122)
8,329
3,207
(1,248)
8,406
7,158
(1) The income tax receivable for 2018 is $16.6 million (2017: $19.7 million) of which $0.3 million is classified as current tax
receivable and $16.3 million is classified as non-current tax receivable (2017: $1.7 million and $18.0 million respectively).
65
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
11. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
Opening Recognised
balance
US$'000
FX
in income differences disposed
US$'000
US$'000
Acquired/ Recognised Closing
balance
in equity
US$'000
US$'000
US$'000
2018
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
3,568
3,326
64
(13,885)
3,314
(441)
1,940
171
695
(1,248)
8,406
7,158
941
(188)
(40)
(228)
(458)
147
267
(446)
72
67
(77)
(10)
(422)
(394)
(8)
-
(392)
52
(230)
-
(85)
(1,479)
-
(1,479)
-
-
-
(2,358)
-
-
-
-
(2,358)
(2,358)
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
-
-
-
-
-
(104)
-
-
-
(104)
-
(104)
4,087
2,744
16
(16,471)
2,464
(346)
1,977
(275)
682
(5,122)
8,329
3,207
20,709
(17,502)
3,207
Where deferred tax assets have been recognised, it is considered probable that the Company will generate sufficient
future taxable income to utilise the assets.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
66
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
11. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
Opening Recognised
balance
US$'000
FX
in income differences disposed
US$'000
US$'000
Acquired/ Recognised Closing
balance
in equity
US$'000
US$'000
US$'000
2017
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Investments in subsidiaries
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
Foreign tax credits
1,304
7,854
-
(19,429)
1,703
600
1,186
(1,500)
(46)
826
(7,502)
5,717
2,366
8,083
2,226
(4,756)
64
5,544
1,561
(306)
719
1,500
217
(154)
6,615
2,689
(2,366)
323
38
228
-
-
50
17
35
-
-
23
391
-
-
-
581
6,938
391
-
-
-
-
-
-
-
-
-
-
-
-
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
-
-
-
-
-
(752)
-
-
-
-
(752)
-
-
-
3,568
3,326
64
(13,885)
3,314
(441)
1,940
-
171
695
(1,248)
8,406
-
8,406
(752)
7,158
20,597
(13,439)
7,158
Unrecognised deferred tax assets
Tax benefit of unused losses 1
Unused tax credits 2
Tax benefit of temporary differences
2018
US$'000
2017
US$'000
221,355
16,698
63,415
301,468
228,309
23,089
62,633
314,031
(1) $93,066 of the tax benefit of unused losses expire within 3-20 years and $128,289 related to tax losses that do
not expire.
(2) All of the unused tax credits expire within 1-10 years.
67
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
11. INCOME TAXES (CONTINUED)
Canadian income tax audits
BOART LONGYEAR LIMITED
As previously disclosed by the Company, the Canada Revenue Agency (“CRA”)’s audit division made a
reassessment which would have resulted in tax, penalties and interest payable as of 31 December 2017 of C$109.4
million for the 2007 through 2012 tax years. The Company has filed applications under the mutual agreement
procedures (“MAP”) of Canada’s tax treaties with the jurisdictions of residence of various relevant foreign affiliates, for
relief from double taxation arising as a result of international reassessments. These procedures have been
completed and agreed with the U.S. and Australia. The CRA chose to withdraw its adjustments from all other treaty
partner jurisdictions except Switzerland, which is underway. As a result of the settlements achieved on domestic
issues and in the MAP process, the remaining unsettled tax, penalties and interest could result in a maximum
remaining assessment of C$29 million. After the application of tax credits and payments, the maximum future cash
outlay could be C$15 million for the remaining unsettled issues. The Company continues negotiation with the CRA in
the appeals process but it is not possible to predict the outcome with any certainty at this time.
The Company has also been reassessed for domestic adjustments for 2013 through 2014 tax years but international
issues have not yet been reassessed. The Company appealed these domestic reassessments of C$3.3 million by
filing Notices of Objection with the CRA, and certain provincial tax authorities. The Company plans to vigorously
dispute these reassessments.
12. LOSS PER SHARE
Basic loss per share
Basic loss per share
The loss and weighted average number of ordinary shares
used in the calculation of basic loss per share are as follows:
Loss used in the calculation of basic EPS
2018
US cents
per share
2017
US cents
per share
(0.2)
(1.6)
2018
US$'000
2017
US$'000
(43,523)
(150,044)
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
68
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
13. TRADE AND OTHER RECEIVABLES
BOART LONGYEAR LIMITED
Trade receivables are recorded at amortised cost. The Company reviews collectability of trade receivables on an
ongoing basis and provides allowances for credit losses when there is evidence that trade receivables may not be
collectible. These losses are recognised in the income statement within operating expenses. When a trade receivable
is determined to be uncollectible, it is written off against the allowance for doubtful accounts. Subsequent recoveries
of amounts previously written off are recorded in other income in profit or loss.
Trade receivables
Loss allowance
Goods and services tax receivable
Other receivables
The ageing of trade receivables is detailed below:
Current
Past due 0 - 30 days
Past due 31 - 60 days
Past due 61-90 days
Past due 90 days
2018
US$'000
2017
US$'000
109,195
(1,391)
7,056
4,722
119,582
123,554
(1,844)
8,229
1,922
131,861
2018
US$'000
2017
US$'000
89,315
13,106
2,166
1,243
3,365
109,195
90,156
18,963
6,338
3,338
4,759
123,554
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime expected
credit losses (ECL). The expected credit losses on trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted
for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate
and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The
Company has recognised a loss allowance of 100% against all receivables over 120 days past due because
historical experience has indicated that these receivables are generally not recoverable.
The Company’s policy requires customers to pay the Company in accordance with agreed payment terms. The
Company’s settlement terms are generally 30 to 60 days from date of invoice. All credit and recovery risk associated
with trade receivables has been provided for in the statement of financial position. Trade receivables have been
aged according to their original due date in the above ageing analysis. No interest is charged on trade receivables.
Credit risk management
The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, when appropriate, as a means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.
Ongoing credit evaluation is performed on accounts receivable. The Company holds security for a number of trade
receivables in the form of letters of credit, deposits, and advance payments.
The Company does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is
limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.
No derivative financial instruments were entered into during 2018 or 2017.
14. INVENTORIES
Inventories are measured at the lower of cost or net realisable value. The cost of most inventories is based on a
standard cost method, which approximates actual cost on a first-in first-out basis, and includes expenditures incurred
in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured
inventories and work in progress, cost includes an appropriate share of production overhead expenses (including
depreciation) based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling expenses.
Allowances are recorded for inventory considered to be excess or obsolete and damaged items are written down to
the net realisable value. Due to the decline in the demand for products, and consumables used in our Global Drilling
Services business, and the high inventory balances across the group and the speed at which inventory is turning in
the current market, significant judgment is required in determining net realisable value of inventory.
69
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BOART LONGYEAR 2018 ANNUAL REPORT
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
14. INVENTORIES (CONTINUED)
BOART LONGYEAR LIMITED
Raw materials
Work in progress
Finished products
2018
US$'000
2017
US$'000
30,836
5,488
129,086
165,410
28,023
3,265
143,087
174,375
The Company did not record any additional provisions against inventory for the years ended 31 December 2018 and
2017. Obsolescence provisions were $18.7 million and $25.0 million as at 31 December 2018 and 2017, respectively.
15. FINANCIAL RISK MANAGEMENT
Capital risk management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns
while maximising the return to stakeholders through the optimisation of the debt and equity balances.
The capital structure of the Company consists of debt, which includes the loans and borrowings disclosed in Note 21,
cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital,
reserves, and accumulated losses/retained earnings.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed throughout these notes.
Credit risk management
The Company reviews the recoverable amount of each trade debt on an individual basis at the end of the reporting
period to ensure that adequate loss allowance is made for irrecoverable amounts. In this regard, the directors of the
Company consider that the Group’s credit risk is significantly reduced. Trade receivables consist of a large number of
customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the
financial condition of accounts receivable.
Of the outstanding loans and borrowings, Centerbridge Partners, L.P. accounted for $292.5 million of Term Loans
outstanding. Centerbridge Partner, L.P., Ares Management L.P. and Ascribe Capital hold $20.6 million of the
backstop ABL with $3.1 million of accreted interest. There are no significant concentrations of credit risk. The
carrying amount reflected above represents the Company’s maximum exposure to credit risk for trade and other
receivables.
Financial risk management objectives
The Company’s corporate treasury function provides services to the business, coordinates access to domestic and
international financial markets, and monitors and manages the financial risks relating to the operations of the
Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks
include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and
cash flow interest rate risk.
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BOART LONGYEAR 2018 ANNUAL REPORT
70
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Market risk
BOART LONGYEAR LIMITED
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. The Company seeks to minimise the effects of these risks, where deemed appropriate, by using
derivative financial instruments and other non-derivative strategies to manage these risk exposures to interest rate
and foreign currency risk, including:
•
•
•
foreign exchange forward contracts to hedge the exchange rate risk arising from transactions not recorded in an
entity’s functional currency,
interest rate swaps to mitigate the risk of rising interest rates; and
other non-derivative strategies.
Foreign currency risk management
Company subsidiaries undertake certain transactions denominated in currencies other than their functional currency,
hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy
parameters. The Company did not utilise any derivative instruments during the years ended 31 December 2018 or
2017.
The most significant carrying amounts of monetary assets and monetary liabilities (which include intercompany
balances with other subsidiaries) that: (1) are denominated in currencies other than the functional currency of the
respective Company subsidiary; and (2) cause foreign exchange rate exposure, at 31 December are as follows:
Assets
Liabilities
2018
US$'000
2017
US$'000
2018
US$'000
2017
US$'000
170,842
269
27,593
143,756
94,116
190
30,454
131,041
55,519
22,933
158,496
153,168
163,003
27,577
146,070
336,060
Australian Dollar
Canadian Dollar
Euro
US Dollar
Foreign currency sensitivity
The Company is mainly exposed to exchange rate fluctuations in the Australian Dollar (AUD), Canadian Dollar (CAD),
Euro (EUR) and United States Dollar (USD). The Company is also exposed to translation differences as the
Company’s presentation currency is different from the functional currencies of various subsidiaries. However, this
represents a translation risk rather than a financial risk and consequently is not included in the following sensitivity
analysis.
The following tables reflect the Company’s sensitivity to a 10% change in the exchange rate of each of the currencies
listed above. This sensitivity analysis includes only outstanding monetary items denominated in currencies other than
the respective subsidiaries’ functional currencies and remeasures these at the respective year end to reflect a 10%
decrease in the indicated currency against the respective subsidiaries’ functional currencies. A positive number
indicates an increase in net profit and/or net assets.
Net profit
Net assets
Net profit
Net assets
10% decrease in AUD
2017
US$'000
2018
US$'000
10% decrease in CAD
2018
US$'000
2017
US$'000
(8,689)
(10,485)
(1,247)
6,264
1,273
2,059
1,557
2,483
10% decrease in EUR
10% decrease in USD
2018
US$'000
4,692
9,186
2017
US$'000
3,919
7,886
2018
US$'000
(5,818)
856
2017
US$'000
9,035
18,638
In management’s opinion, the sensitivity analysis is not fully representative of the inherent foreign exchange risk as
the year-end exposure may not reflect the exposure during the course of the year.
71
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BOART LONGYEAR 2018 ANNUAL REPORT
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Forward foreign exchange contracts
BOART LONGYEAR LIMITED
There were no open forward foreign currency contracts as at 31 December 2018 or 2017.
Interest rate risk management
Most of the Company’s loan portfolio is at fixed interest rates, as such it has less exposure to variable interest rates
than fixed interest rates.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Company’s Treasurer and Board.
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities.
Liquidity risk
The following tables reflect the expected maturities of non-derivative financial liabilities as at 31 December 2018 and
2017. These are based on the undiscounted expected cash flows of financial liabilities based on the maturity profile
per the loan agreement. The table includes both interest and principal cash flows. The adjustment column represents
the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in
the carrying amount on the balance sheet.
Weighted
average
effective
interest
rate
%
Less
than
1 to 3
3 months
to
1 year
1 month months
US$'000 US$'000 US$'000
1 to 5
years
US$'000
Adjustment
US$'000
Total
US$'000
31 December 2018
Non-interest bearing
payables
Variable interest rate
instruments
Fixed interest rate
instruments
Financial Lease
31 December 2017
Non-interest bearing
payables
Variable interest rate
instruments
Fixed interest rate
instruments
Financial Lease
-
93,091
18,107
-
-
-
111,198
5.7%
8.1%
7.1%
142
283
1,274
31,008
(2,654)
30,053
-
98
93,331
-
196
18,586
-
884
2,158
916,232
3,765
951,005
(227,760)
(230,414)
688,472
4,943
834,666
-
93,196
45,052
-
-
-
138,248
5.1%
8.9%
4.6%
73
146
656
18,376
(2,240)
17,011
-
66
93,335
-
132
45,330
-
595
1,251
930,935
1,877
951,188
(304,421)
(306,661)
626,514
2,670
784,443
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
72
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
BOART LONGYEAR LIMITED
The following tables reflect the expected maturities of non-derivative financial assets. These are based on the
undiscounted expected cash flows of the financial assets.
2018
Non-interest bearing
receivables
Cash
2017
Non-interest bearing
receivables
Cash
Less
than
1 month
US$'000
1 to 3
months
US$'000
3 months
to
1 year
US$'000
Total
US$'000
62,535
38,942
101,477
48,778
-
48,778
61,399
43,758
105,157
60,582
-
60,582
8,269
-
8,269
9,880
-
9,880
119,582
38,942
158,524
131,861
43,758
175,619
The liquidity risk tables are based on the Company’s intent to collect the assets or settle the liabilities in accordance
with the contractual terms.
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
•
•
•
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with
the substance of the contractual arrangements.
The fair value of financial assets and financial liabilities with standard terms and conditions and traded
on active liquid markets are determined with reference to quoted market prices.
The fair value of other financial assets and financial liabilities (excluding derivative instruments) are
determined in accordance with generally accepted pricing models based on discounted cash flow
analyses using prices from observable current market transactions.
Management considers that the carrying amounts of financial assets and financial liabilities recorded at amortised
cost in the financial statements materially approximate their fair values.
16. ASSETS CLASSIFIED AS HELD FOR SALE
Based on current market conditions and future outlook, the Company has classified certain property, plant and
equipment assets in the amount of $467 thousand as held for sale as at 31 December 2018 (31 December 2017:
$530 thousand). These assets consist primarily of excess rigs and ancillary equipment. The opportunity for a
gain by the disposition of these targeted assets allows the Company to rationalise its assets, raise capital and
eliminate ongoing costs associated with maintaining these assets.
73
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BOART LONGYEAR 2018 ANNUAL REPORT
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
17. PROPERTY, PLANT AND EQUIPMENT
BOART LONGYEAR LIMITED
The Company’s assets are held in various differing geographical, political and physical environments across the
world, therefore, the estimation of useful lives of assets is an area of significant judgment. Our current estimate has
been based on historical experience. In addition, the condition of the assets is assessed at least annually and
considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Costs
include expenditures that are directly attributable to the acquisition of the asset, including the costs of materials and
direct labour and other costs directly attributable to bringing the asset to a working condition for the intended use.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate assets.
Subsequent costs related to previously capitalised assets are capitalised only when it is probable that they will result
in commensurate future economic benefit and the costs can be reliably measured. All other costs, including repairs
and maintenance, are recognised in profit or loss as incurred.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of
property, plant and equipment. Leased assets are depreciated over the shorter of the lease terms or their useful
lives. Items in the course of construction or not yet in service are not depreciated.
The following useful lives are used in the calculation of depreciation:
Buildings
Plant and machinery
Drilling rigs
Other drilling equipment
Office equipment
Computer equipment:
Hardware
Software
20-40 years
years
5-10
years
5-12
years
1-5
years
5-10
3-5
1-7
years
years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
Leased assets
Leases are classified as finance leases when the terms of the leases transfer substantially all the risks and rewards
incidental to ownership of the leased assets to the Company. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised at fair value or, if lower, at amounts equal to the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to
the lessor is included in the statement of financial position as a finance lease obligation.
Finance lease payments are apportioned between finance charges and reductions of the lease obligations so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance leased assets are amortised on a
straight-line basis over the shorter of the lease terms or the estimated useful lives of the assets.
Operating lease payments are recognised as expenses on a straight-line basis over the lease terms. See Note 26 for
more information.
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BOART LONGYEAR 2018 ANNUAL REPORT
74
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
BOART LONGYEAR LIMITED
Land and
Buildings
US$'000
Plant and
Equipment
US$'000
Construction
in Progress
US$'000
Total
US$'000
Balance at 1 January 2017
Additions
Disposal
Transfers from assets held for sale
Transfer from CIP
Transfer from intangible assets
Currency movements
Balance at 31 December 2017
Additions
Disposal
Transfers from assets held for sale
Transfer from CIP
Transfer from intangible assets
Currency movements
Balance at 31 December 2018
Accumulated depreciation and impairment:
Balance at 1 January 2017
Depreciation
Impairment
Disposal
Currency movements
Balance at 31 December 2017
Depreciation
Impairment
Disposal
Transfers from assets held for sale
Currency movements
Balance at 31 December 2018
Net book value at 31 December 2017
Net book value at 31 December 2018
47,344
34
(3,022)
-
562
-
2,755
47,673
8
(2,067)
-
5,754
-
(2,365)
49,003
(15,143)
(1,723)
(196)
1,854
(1,292)
(16,500)
(1,965)
-
1,310
-
1,403
(15,752)
31,173
33,251
608,668
797
(63,956)
-
18,063
723
31,541
595,836
1,260
(51,227)
-
39,084
-
(35,373)
549,580
(522,782)
(37,513)
(1,875)
61,111
(26,033)
(527,092)
(29,164)
(123)
46,040
-
28,690
(481,649)
68,744
67,931
9,573
26,684
-
-
(18,625)
-
581
18,213
38,088
-
-
(44,838)
-
1,453
12,916
-
-
-
-
-
-
-
-
-
-
-
-
18,213
12,916
665,585
27,515
(66,978)
-
-
723
34,877
661,722
39,356
(53,294)
-
-
-
(36,285)
611,499
(537,925)
(39,236)
(2,071)
62,965
(27,325)
(543,592)
(31,129)
(123)
47,350
-
30,093
(497,401)
118,130
114,098
Property, plant and equipment is reviewed at each reporting date to determine whether there is any indication of
impairment. Assets are first considered individually to determine whether there is any impairment related to specific
assets due to factors such as technical obsolescence, declining market value, physical condition or salability within a
reasonable timeframe. As a result of this exercise, the Company recorded an impairment loss at 31 December 2018
and 31 December 2017 of $123 thousand and $2.1 million, respectively on property, plant and equipment.
75
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BOART LONGYEAR 2018 ANNUAL REPORT
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
18. GOODWILL AND OTHER ASSET IMPAIRMENT CONSIDERATIONS
BOART LONGYEAR LIMITED
Goodwill resulting from business combinations is recognised as an asset at the date that control is acquired. Goodwill
is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in
the acquiree, and the fair value of the previously held equity interest in the acquiree (if any) over the net amounts of
the identifiable assets acquired and the liabilities assumed.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing,
goodwill is allocated to each of the Company’s cash-generating units expected to benefit from the acquisition. Cash-
generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when
there is an indication that the carrying value of the unit may be impaired. If the recoverable amount of the cash-
generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
Upon disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
Goodwill, intangible assets and property, plant and equipment
The Company determines whether goodwill is impaired on an annual basis and assesses impairment of all other
assets at each reporting date by evaluating whether indicators of impairment exist. This evaluation includes
consideration of the market conditions specific to the industry in which the group operates, the increase, or decline in
demand for our drilling services and rig utilisation rates, the political environment in countries in which the group
operates, technological changes, expectations in relation to future cash flows and the Company’s market
capitalisation. Where an indication of impairment exists the recoverable amount of the asset is determined.
Recoverable amount is the greater of fair value less costs to sell and value in use. Impairment is considered for
individual assets, or cash generating units (“CGU”). Judgments are made in determining appropriate cash generating
units. When considering whether impairments exist at a CGU, the Company uses the value in use methodology.
The value in use calculation requires the Company to estimate the future cash flows expected to arise from a cash-
generating unit and a suitable discount rate in order to calculate present value. These estimates are subject to risk
and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may
impact the recoverable amount of the assets.
Goodwill by cash-generating units
Gross carrying amount:
Balance at 1 January 2017
Currency movements
Balance at 31 December 2017
Balance at 1 January 2018
Acquisiton of business
Currency movements
Balance at 31 December 2018
Note
US$'000
100,036
1,160
101,196
101,196
3,940
(1,277)
103,859
34
The carrying amount of goodwill of $103.9 million as at 31 December 2018 and $101.2 million as at 31 December
2017 was in the North America Drilling Services CGU. The additions of $3.9 million are related to the acquisition of
Globaltech. See Note 34 for more information.
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
76
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
18. GOODWILL AND OTHER ASSET IMPAIRMENT CONSIDERATIONS (CONTINUED)
Allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment testing purposes to individual cash-generating units. The carrying
amount of goodwill by geographic segment allocated to cash-generating units that are significant individually or in
aggregate is as follows:
Goodwill by cash-generating units
North America Drilling Services
Asia Pacific - Globaltech
2018
US$'000
99,919
3,940
103,859
2017
US$'000
101,196
-
101,196
The carrying amount of goodwill is tested for impairment annually at 31 December and whenever there is an indicator
that the asset may be impaired. If goodwill is impaired, it is written down to its recoverable amount.
Goodwill impairment by cash-generating units
Goodwill and intangible assets in the EMEA, Latin America and Asia Pacific Drilling Services CGUs have been fully
impaired. For the North America Drilling Services CGU, the Company performed a goodwill impairment test at 31
December 2018 and the recoverable amount for the North America Drilling Services CGU exceeded the goodwill
carrying amount. Goodwill arising from the acquisition of Globaltech in Asia Pacific was also tested for impairment
and the recoverable amount exceeded the Globaltech carrying amount. Consequently, no goodwill impairments were
recorded for the year ended 31 December 2018.
Key assumptions
Certain key assumptions are used for CGU impairment testing and are described below.
In its impairment assessment, the Company calculates the recoverable amounts based on value-in-use calculations.
Cash flow projections are based on the Company’s expected performance over a ten-year period, which
approximates the length of a typical mining business cycle based on historical industry experience, with a terminal
value. Central to the approach adopted is the assumption that the mining industry will continue to follow its historical
trend of cycles. In assessing value in use, the estimated future cash flows are discounted to their present value using
a post-tax discount rate that reflects the current market assessments of the time value of money and risks specific to
the asset. The post-tax discount rate is applied to post tax cash flows that include an allowance for tax based on the
respective jurisdictions’ tax rate. No allowance is made for existing timing differences or carry-forward losses.
This method is used to approximate the requirement of the accounting standards to apply a pre-tax discount rate to
pre-tax cash flows as the Company determined it was not feasible to calculate a stand-alone pre-tax discount rate.
77
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BOART LONGYEAR 2018 ANNUAL REPORT
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
18. GOODWILL AND OTHER ASSET IMPAIRMENT CONSIDERATIONS (CONTINUED)
Revenue – NAM Drilling Services
In determining the growth rates applied to revenue through the mining cycle, we have had regard to the following:
•
•
•
Average revenue growth over previous mining cycles, with revenue in the forecast period and terminal year
based on the average actual revenue in the last five years.
Rates of inflation in the countries where the Company does business (sourced CapIQ).
Price and volume expectations over the forecast period.
Expenses
In determining gross margin and SG&A expenses management has used historical performance trends, overlaying
the impacts of recent programs and other initiatives already taken within the business to reduce costs.
Working capital and capital expenditure
Working capital and capital expenditure assumptions are assumed to be in line with historic trends given the level of
utilisation and operating activity.
Discount rate and terminal growth rate
A global discount rate of 11.5% is used and adjusted on a case-by-case basis for regional variations in the required
equity rate of return. Based on information published by Bloomberg, the adjusted post-tax discount rate for the North
American region is 11.0% and the terminal growth rate of 3.0% does not exceed the long-term average growth rate
for the industry.
As part of our impairment test we have considered a number of different scenarios that consider the impact on the
value-in-use calculations if key assumptions were to vary from those used in the calculations. We analysed the impact
If revenue and gross margins do not improve as forecast in our impairment analysis due to lower than expected price
and volume recovery and the Company is unable to adjust its cost structure. The analysis resulted in no impairment
under these scenarios.
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BOART LONGYEAR 2018 ANNUAL REPORT
78
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
19. OTHER INTANGIBLE ASSETS
Trademarks and trade names
BOART LONGYEAR LIMITED
Trademarks and trade names recognised by the Company that are considered to have indefinite useful lives are not
amortised. Each period, the useful life of each of these assets is reviewed to determine whether events and
circumstances continue to support an indefinite useful life assessment for the asset. Trademarks and trade names
that are considered to have a finite useful life are carried at cost less accumulated amortisation and accumulated
impairment losses and have an average useful life of three years. Such assets are tested for impairment at least
annually or more frequently if events or circumstances indicate that the asset might be impaired.
Contractual customer relationships
Contractual customer relationships acquired in business combinations are identified and recognised separately from
goodwill where they satisfy the definition of an intangible asset and their fair values can be reliably measured.
Contractual customer relationships have finite useful lives and are carried at cost less accumulated amortisation and
accumulated impairment losses.
Contractual customer relationships are amortised over 10 – 15 years on a straight-line basis. Amortisation methods
and useful lives are reassessed at each reporting date.
Patents
Patents are measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation is
charged on a straight-line basis over estimated useful lives of 10 - 20 years. Amortisation methods and useful lives
are reassessed at each reporting date.
Research and development costs
Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, are recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and
processes. Development costs are capitalised only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable, and the Company intends to
and has sufficient resources to complete development and to use or sell the asset. Capitalised costs include the cost
of materials, direct labour and overhead costs directly attributable to preparing the asset for its intended use. Other
development costs are expensed when incurred.
Capitalised development costs are measured at cost less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis over the estimated useful lives, which on average is 15
years.
79
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
19. OTHER INTANGIBLE ASSETS (CONTINUED)
BOART LONGYEAR LIMITED
Gross carrying amount:
Balance at 1 January 2017
Additions
Disposals
Transfer to PP&E
Currency movements
Balance at 31 December 2017
Balance at 1 January 2018
Additions
Acquisition of business
Disposals
Currency movements
Balance at 31 December 2018
Accumulated amortisation:
Balance at 1 January 2017
Amortisation for the period
Disposals
Impairment for the period
Currency movements
Balance at 31 December 2017
Balance at 1 January 2018
Amortisation for the period
Disposals
Impairment for the period
Currency movements
Balance at 31 December 2018
Note
Trademarks Patents
US$'000
US$'000
Customer
relationships
and other
US$'000
Develop-
ment
Software
assets
US$'000 US$'000
34
4,293
33
(1,266)
-
-
3,060
3,060
27
1
-
-
3,088
(1,270)
-
1,270
-
-
-
-
-
-
-
-
-
7,137
961
(1)
-
-
8,097
8,097
815
353
(52)
(7)
9,206
(1,513)
(471)
-
-
-
(1,984)
(1,984)
(388)
-
-
-
(2,372)
46,529
-
(5,321)
-
1,752
42,960
42,960
-
-
-
(2,206)
40,754
(39,076)
(1,622)
5,321
-
(1,712)
(37,089)
(37,089)
(1,124)
-
-
2,195
(36,018)
89,111
12
(2)
-
20
89,141
89,141
-
-
(12)
(29)
89,100
(76,846)
(8,568)
-
-
(18)
(85,432)
(85,432)
(2,693)
28
(18)
23
(88,092)
45,745
1,844
(1)
(723)
(23)
46,842
46,842
1,174
7,436
-
(244)
55,208
(30,190)
(1,211)
-
(104)
19
(31,486)
(31,486)
(1,241)
-
(410)
26
(33,111)
Total
US$'000
192,815
2,850
(6,591)
(723)
1,749
190,100
190,100
2,016
7,790
(64)
(2,486)
197,356
(148,895)
(11,872)
6,591
(104)
(1,711)
(155,991)
(155,991)
(5,446)
28
(428)
2,244
(159,593)
Net book value at 31 December 2017
Net book value at 31 December 2018
3,060
3,088
6,113
6,834
5,871
4,736
3,709
1,008
15,356
22,097
34,109
37,763
Other intangible assets are reviewed at each reporting date to determine whether there is any indication of
impairment. As a result of the Company’s review of specific intangible assets, the Company recorded an impairment
loss at 31 December 2018 and 31 December 2017 of $428 thousand and $104 thousand, respectively.
The Company has reassessed the carrying value of certain development assets relating to its Global Products
business. The 31 December 2018 review did not lead to an impairment for that period.
The Company recognised $6.6 million of research and development expenses in the consolidated statement of profit
or loss and other comprehensive income for the year ended 31 December 2018 (2017: $8.1 million).
_______________________________________________________________________________________
BOART LONGYEAR 2018 ANNUAL REPORT
80
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
20. TRADE AND OTHER PAYABLES
BOART LONGYEAR LIMITED
Trade payables and other payables are carried at amortised cost. They represent unsecured liabilities for goods and
services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company
becomes obligated to make future payments.
Current
Trade payables
Accrued payroll and benefits
Accrued recapitalision costs
Goods and services tax payable
Accrued interest
Accrued legal and environmental
Professional fees
Accrued drilling costs
Other sundry payables and accruals
2018
US$'000
2017
US$'000
52,685
23,834
-
17,788
192
4,405
4,583
2,572
5,139
111,198
65,486
26,759
9,898
13,229
1,051
5,625
4,535
2,484
9,181
138,248
No interest is charged on the trade payables for this period. Thereafter, various percentages of interest may be charged
on the outstanding balance based on the terms of the specific contracts. The Company has financial risk management
policies in place to ensure that all payables are paid within the credit timeframe.
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except:
•
•
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the
cost of acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating
cash flows.
_______________________________________________________________________________________
81
81
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
21. LOANS AND BORROWINGS
BOART LONGYEAR LIMITED
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. Debt issuance costs are amortised using the effective interest rate method over the life of the
borrowing. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Unsecured - at amortised cost
Non-current
Senior notes
Accreted interest
Secured - at amortised cost
Current
Finance lease liabilities
Non-current
Senior notes
Term loans
Accreted interest
Revolver bank loans
Debt issuance costs
Original issue discount
Finance lease liabilities
Disclosed in the financial statements as:
Current borrowings
Non-current borrowings
A summary of the maturity of the Company's borrowings is as follows:
Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
More than 4 years
Original issue discount
Debt issuance costs
2018
US$'000
2017
US$'000
88,882
1,791
88,882
444
1,183
794
217,035
292,441
43,317
75,054
(1,017)
(1,000)
3,765
721,451
1,183
720,268
721,451
1,183
83,020
1,100
637,555
610
723,468
(1,000)
(1,017)
721,451
217,035
190,000
85,153
62,011
(1,917)
(1,600)
1,876
642,678
794
641,884
642,678
794
657
64,255
562
579,927
646,195
(1,600)
(1,917)
642,678
_______________________________________________________________________________________
82
BOART LONGYEAR 2018 ANNUAL REPORT
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
21. LOANS AND BORROWINGS (CONTINUED)
Senior notes
BOART LONGYEAR LIMITED
Senior Unsecured Notes
The Company has $88.9 million of senior unsecured notes outstanding as at 31 December 2018 and 2017. These notes
carry an interest rate of 1.5%, per annum, which is payable-in-kind (i.e. non cash) until maturity in December 2022. The
Company may redeem all or a portion of the notes prior to maturity subject to certain conditions, including in certain cases
the payment of premiums or make-whole amounts.
Senior Secured Notes
The Company has $217.0 million of senior secured notes outstanding as at 31 December 2018 and 2017. These notes
carry an interest rate of 12% per annum which is payable-in-kind at the Company’s election until December 2018 and
thereafter in cash at the reduced interest rate of 10% per annum with a scheduled maturity date of December 2022. The
Company may redeem all or a portion of the notes prior to maturity subject to certain conditions, including in certain cases
the payment of premiums or make-whole amounts.
With respect to the senior notes issued by the Company, the indenture governing those senior notes includes covenants
that restrict the Company’s ability to engage in certain activities, including incurring additional indebtedness and making
certain restricted payments as well as a limitation on the amount of secured debt the Company may incur. The senior
notes contain certain provisions that provide the note holders with the ability to declare a default, and accelerate the
notes, should a default occur under either of the Term Loans that results in acceleration of such Term Loans. The senior
notes do not require maintenance or testing of financial covenant ratios.
Revolver Bank Loans
ABL
Available facility
Drawn (i)
Letters of credit (ii)
Availability block
Undrawn (iii)
31 December
2018
US$m
31 December
2017
US$m
50.0
30.0
5.9
-
14.1
50.0
40.0
17.0
13.0
5.0
5.0
40.0
(i)
(ii)
The Company has an asset based revolving bank facility with capacity of $50.0 million of which $30.0 million
(31 December 2017: $17.0 million) was drawn.
As at 31 December 2018 $5.9 million (31 December 2017: $13.0 million) of outstanding letters of credit were
drawn under the facility.
(iii) Of the undrawn amount $7.5 million is subject to springing dominion as of a date of determination if Undrawn
Availability shall be less than or equal to $7.5 million as of the last day of any month.
Interest on drawn amounts and letters of credit are based on a base rate plus margin (30 day USD LIBOR plus
3.25%).
The facility is secured by a first lien on the accounts receivable, inventories, deposit accounts and cash (“working
capital assets”) of the ABL borrower and guarantors, and a third lien over substantially all of the other tangible and
intangible assets (“non-working capital assets”) of the ABL borrower and guarantors, including equipment, intellectual
property and the capital stock of subsidiaries (but excluding real property).
Scheduled maturity date of the facility is July 2020. As at 30 June 2018 the Company was in compliance with all of its
debt covenants.
_______________________________________________________________________________________
83
83
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
21. LOANS AND BORROWINGS (CONTINUED)
BOART LONGYEAR LIMITED
Backstop ABL
The term loan facility has an interest rate of 11% per annum payable-in kind or 10% per annum payable in cash at the
option of the borrower. It is secured by substantially the same collateral as the ABL credit facility and contains a maturity
of October 2020. As at 31 December 2018 and 2017 the amount outstanding under this facility was $45.0 million.
As at 31 December 2018 the Company was in compliance with all of its debt covenants.
Term Loans
The Company has a term loan facility which is structured as Tranche A and Tranche B loans. As part of the
Recapitalisation in September 2017 the Company restructured its Term Loans. Interest on Term Loans A and B is
reduced from 12% to 10% payable –in-kind through to December 2018 and 8% payable-in-kind thereafter. Maturity was
extended until December 2022. The term loan tranches are structured to accrete interest, which is payable to the term
loan lender, Centerbridge Partners, L.P., a related party.
Since inception, interest of $47.6 million and $34.8 million had accreted for Tranche A and Tranche B loans, respectively.
On 31 December 2018, the issuer of these loans was changed from Boart Longyear Management Pty. Ltd. to BL Capital
Management LLC and the accreted interest to 31 December 2018 was capitalised to the principal balance. No changes to
interest rates or maturity dates were made.
Tranche A
As at 31 December 2018 and 2017 the amount outstanding was $132.6 and $85.0 million, respectively. This tranche
contains a maturity of December 2022 and is non-callable for the first 4 years. It is secured by a first lien on the Working
Capital Assets of the Term Loan A guarantors that are not ABL guarantors, a second lien on the Working Capital assets of
the Term Loan A issuer and the Term Loan A guarantors that are also ABL guarantors, and a second lien on substantially
all of the Non-Working Capital Assets of the Term Loan A issuer and guarantors, including equipment, intellectual
property, the capital stock of subsidiaries and certain owned real property.
Tranche B
As at 31 December 2018 and 2017 the amount outstanding under Tranche B was $159.9m and $105.0 million,
respectively. This tranche contains a maturity of December 2022 and is non-callable for the life of the loan. It is secured
by a second lien on the Working Capital Assets of the Term Loan B and Senior Secured Notes guarantors that are not
ABL guarantors, a third lien on the Working Capital Assets of the Term Loan B and Senior Secured Notes issuer and the
Term Loan B and Senior Secured Notes guarantors that are also ABL guarantors, and a first lien on substantially all of the
Non-Working Capital Assets of the Term Loan B and Senior Secured Notes issuer and guarantors, including equipment,
intellectual property, the capital stock of subsidiaries and certain owned real property.
The Company’s term loans do not require maintenance or testing of financial covenant ratios.
_______________________________________________________________________________________
84
BOART LONGYEAR 2018 ANNUAL REPORT
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
21. LOANS AND BORROWINGS (CONTINUED)
BOART LONGYEAR LIMITED
Further details around the Issuer/Borrower and Guarantors of the Company’s debt instruments are included below:
Description
Issuer/Borrower Guarantors
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Senior
Secured
Notes
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Senior
Unsecured
Notes
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Australia: Boart Longyear Management Pty Limited, Boart Longyear Australia Pty Limited, Boart Longyear
Limited, Boart Longyear Investments Pty Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Term Loan
A
BL Capital
Management
LLC
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BLY US Holdings Inc. and Longyear TM, Inc.
Term Loan
B
BL Capital
Management
LLC
Same as Term Loan A
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
ABL
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Backstop
ABL
Boart
Longyear
Management
Pty Limited
Same as ABL
_______________________________________________________________________________________
85
85
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
22. PROVISIONS
BOART LONGYEAR LIMITED
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
Employee benefits
Liabilities for employee benefits for wages, salaries, annual leave, long service leave, and sick leave represent present
obligations resulting from employees’ services provided and are calculated at discounted amounts based on rates that the
Company expects to pay as at reporting date, including costs such as workers’ compensation insurance and payroll tax,
when it is probable that settlement will be required and they are capable of being reliably measured.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured
as the present value of the estimated future cash outflows to be made by the Company in respect of services provided by
employees up to reporting date.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and
services, are expensed based on the net marginal cost to the Company as the benefits are provided to the employees.
Provisions are recognised for amounts expected to be paid under short-term cash bonus or profit-sharing plans if the
Company has present legal or constructive obligations to pay these amounts as a result of past service provided by
employees and the obligations can be reliably estimated.
Warranties
The Company provides statutory product warranties through its contracts with customers and does not offer the option to
purchase warranties separately.
The Company maintains warranty reserves for products it manufactures. A provision is recognised when the following
conditions are met: 1) the Company has an obligation as a result of an implied or contractual warranty; 2) it is probable
that an outflow of resources will be required to settle the warranty claims; and 3) the amount of the claims can be reliably
estimated.
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are less than the
unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the
lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
The following table reflects the provision balances:
Current
Employee benefits
Restructuring and termination costs
Warranty
Onerous leases
Non-current
Employee benefits
Pension and post-retirement benefits (Note 23)
Onerous leases
2018
US$'000
2017
US$'000
11,561
6,054
1,268
1,008
19,891
1,291
8,682
819
10,792
30,683
8,995
7,644
1,299
1,513
19,451
4,607
12,601
1,512
18,720
38,171
_______________________________________________________________________________________
86
BOART LONGYEAR 2018 ANNUAL REPORT
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
23. PENSION AND POST-RETIREMENT BENEFITS
BOART LONGYEAR LIMITED
Defined contribution pension plans and post-retirement benefits
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity.
The Company has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets
to pay all employees the benefits relating to employee service in the current and prior periods. The amount recognised as
an expense in profit or loss in respect of pension costs and other post-retirement benefits is the contributions payable in
the year. Differences between contributions payable in the year and contributions actually paid are shown as either
accruals or prepayments in the statement of financial position.
Defined contribution plans
Pension costs represent actual contributions paid or payable by the Company to the various plans. At 31 December
2018, and 2017, there were no significant outstanding/prepaid contributions. Company contributions to these plans were
$6.0 million and $5.8 million for the years ended 31 December 2018 and 2017, respectively.
The assets of the defined contribution plans are held separately in independently administered funds. The charge in
respect of these plans is calculated on the basis of contributions payable by the Company during the fiscal year.
Defined Benefit Pension Plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit
is discounted to determine its present value, and the fair value of any fund assets is deducted.
The discount rate is the yield at the balance sheet date on high quality corporate bonds that have maturity dates
approximating the terms of the Company’s defined benefit obligations. The calculation is performed by a qualified actuary
using the projected unit credit method. Actuarial gains and losses arising from experience adjustments and related
changes in actuarial assumptions are charged or credited to retained earnings.
The Company provides defined contribution and defined benefit pension plans for the majority of its employees. It also
provides post-retirement medical arrangements in North America.
The Company’s accounting policy for defined benefit pension plans requires management to make annual estimates and
assumptions about future returns on classes of assets, future remuneration changes, employee attrition rates,
administration costs, changes in benefits, inflation rates, exchange rates, life expectancy and expected remaining periods
of service of employees. In making these estimates and assumptions, management considers advice provided by
external advisers, such as actuaries. Where actual experience differs to these estimates, actuarial gains and losses are
recognised directly in equity.
Full actuarial valuations of the defined benefit pension plans were performed as at various dates and updated to 31
December 2018 by qualified independent actuaries. The estimated market value of the assets of the funded pension
plans was $193.5 million and $211.1 million at 31 December 2018, and 2017, respectively. The market value of assets
was used to determine the funding level of the plans. The market value of the assets of the funded plans was sufficient to
cover 90% in 2018 and 2017, of the benefits that had accrued to participants after allowing for expected increases in
future earnings and pensions. Entities within the Company are paying contributions as required by statutory requirements
and in accordance with local actuarial advice.
The majority of the defined benefit pension plans are funded in accordance with minimum funding requirements by local
regulators. The assets of these plans are held separately from those of the Company, in independently administered
funds, in accordance with statutory requirements or local practice throughout the world.
The majority of the defined benefit pension plans are closed to new participants. Under the projected unit credit method,
service cost will increase as the participant ages until retirement when it goes to zero. In addition, changes to the
discount rate can increase or decrease service cost.
_______________________________________________________________________________________
87
87
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
23. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Defined Benefit Pension Plans (Continued)
BOART LONGYEAR LIMITED
Company contributions to these plans were $6.0 million and $5.8 million during the years ended 31 December 2018 and
2017, respectively. Contributions in 2019 are expected to be $6.5 million.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension costs are
detailed below (shown in weighted averages):
Discount rates
Expected Average Rate Increases:
Salaries
Pensions in payment
Healthcare costs (initial)
Healthcare costs (ultimate)
2018
2017
North
America
4.3%
Europe
1.8%
North
America
3.5%
Europe
1.6%
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:
2018
Post-
retirement
Pension
Plan medical Plan
US$'000
1,083
411
-
1,494
US$'000
-
12
-
12
Total
US$'000
1,083
424
-
Pension
Plan
US$'000
1,226
665
-
1,507
1,891
2017
Post-
retirement
medical Plan
US$'000
-
11
-
11
Total
US$'000
1,226
676
-
1,902
Current service cost
Net interest expense
Past service cost
Total charge to profit
and loss account
For the financial years ended 31 December 2018 and 2017, charges of approximately $1.3 million and $1.6 million,
respectively, have been included in cost of goods sold and the remainder in general and administrative or sales and
marketing expenses.
_______________________________________________________________________________________
88
BOART LONGYEAR 2018 ANNUAL REPORT
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
23. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Changes in the present value of the defined benefit obligations were as follows:
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial gains arising from
demographic assumptions
Actuarial losses arising from
financial assumptions
Assets distributed on settlements
Past service cost
Exchange differences on foreign plans
Benefits paid
Federal subsidy on benefits paid
Closing defined benefit obligation
2018
Post-
retirement
Medical Plan
US$'000
417
-
13
Pension
Plan
US$'000
223,271
1,083
6,243
Total
US$'000
223,688
1,083
6,256
2017
Post-
retirement
Medical Plan
US$'000
324
-
11
Pension
Plan
US$'000
207,653
1,226
6,487
Total
US$'000
207,977
1,226
6,498
231
-
231
(1,197)
-
(1,197)
(7,803)
(5)
(7,808)
3,983
-
(10,388)
(10,752)
-
(31)
(55)
-
-
-
-
(10,419)
(10,807)
-
15,910
(10,791)
-
201,885
339
202,224
223,271
115
-
-
28
(61)
-
417
4,098
-
-
15,938
(10,852)
-
223,688
Changes in the fair value of the plan assets were as follows:
Opening fair value plan of assets
Expected return on plan assets
Actuarial gains arising from
financial assumptions
Administrative expenses paid from the trust
Exchange differences on foreign plans
Contributions from the employer
Distribution of assets from settled plan
Contributions from plan participants
Benefits paid
Closing fair value of plan assets
2018
Post-
retirement
Medical Plan
US$'000
-
-
-
-
-
55
-
-
(55)
-
Pension
Plan
US$'000
211,087
5,911
(6,910)
(1,045)
(10,647)
5,898
-
-
(10,752)
193,542
Total
US$'000
211,087
5,911
(6,910)
(1,045)
(10,647)
5,953
-
-
Pension
Plan
US$'000
185,542
5,823
10,536
(1,141)
15,341
5,777
-
-
2017
Post-
retirement
Medical Plan
US$'000
-
-
-
-
61
Total
US$'000
185,542
5,823
10,536
(1,141)
15,341
5,838
-
-
(10,807)
193,542
(10,791)
211,087
(61)
-
(10,852)
211,087
Assumed healthcare cost trend rates impact the amounts recognised in profit or loss. A one percentage point change in
assumed healthcare cost trend rates would have the following effects:
One percentage point increase
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
One percentage point decrease
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
2018
US$'000
2017
US$'000
1
-
-
2
-
-
(1)
(2)
_______________________________________________________________________________________
89
89
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
24. ISSUED CAPITAL
BOART LONGYEAR LIMITED
2018
Shares
'000
US$'000
2017
Shares
'000
US$'000
Ordinary shares
Share capital
Ordinary shares, fully paid
26,296,215
1,463,185
26,289,795
1,463,167
Movements in ordinary shares
Balance at beginning of year
Non-controlling interest
Issued to Directors
Issued under the recapitalisation
Conversion of perferred shares
Vesting of LTIP rights
Cancellation of LTIP rights
Balance at end of the year
26,289,795
1,463,167
940,585
1,204,291
-
6,420
-
-
-
-
-
18
-
-
-
-
12,758
24,895,916
434,002
6,534
-
26,296,215
1,463,185
26,289,795
485
194,873
59,507
1,642
2,369
1,463,167
Total shares outstanding
Shares held in trust
Balance at end of the year
26,296,215
1,463,185
26,289,795
1,463,167
-
-
-
-
26,296,215
1,463,185
26,289,795
1,463,167
Convertible Preference shares
Preferred shares, fully paid
Conversion of perferred shares
Balance at end of the year
Issued Warrants
Warrants issued but not exercised
Balance at end of the year
Total ordinary, convertible
preference shares and warrants
2018
Shares
'000
US$'000
2017
Shares
'000
-
-
-
-
-
-
434,002
(434,002)
-
US$'000
59,507
(59,507)
-
2018
Warrants
'000
US$'000
2017
Warrants
'000
US$'000
731,082
731,082
5,591
5,591
731,082
731,082
5,591
5,591
1,468,776
1,468,758
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the
proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in
connection with the issue of those equity instruments and which would not have been incurred had those instruments not
been issued.
_______________________________________________________________________________________
90
BOART LONGYEAR 2018 ANNUAL REPORT
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
25. DIVIDENDS
BOART LONGYEAR LIMITED
No dividend has been determined for any of the half-years ended 30 June 2018, 31 December 2018, 30 June 2017 or 31
December 2017.
There are no franking credits available for the years ended 31 December 2018 or 2017.
26. COMMITMENTS FOR EXPENDITURE
The Company has a number of continuing operational and financial commitments in the normal course of business.
Capital commitments
Purchase commitments for capital expenditures
3,560
3,298
2018
US$'000
2017
US$'000
Non-cancellable future operating lease commitments as at 31 December 2018 and 2017 consist of the following:
Payments due within:
1 year
2 to 5 years
After 5 years
31 December 2018
31 December 2017
Land and
buildings
US$'000
Plant and
equipment
US$'000
Land and
buildings
US$'000
Plant and
equipment
US$'000
2,101
11,686
19,732
33,519
445
10,525
198
11,168
8,908
8,711
22,242
39,861
719
1,256
334
2,309
Description of operating leases
The Company has operating leases for land, buildings, plant and equipment with the following lease terms:
1 – 20 years for land and buildings with an average lease term of five years
1 – 5 years for machinery and equipment with an average lease term of two years
1 – 5 years for all other property with an average lease term of four years
The Company’s property operating leases generally contain escalation clauses, which are fixed increases generally
between 2% and 8%, or increase subject to a national index. The Company does not have any significant purchase
options.
Contingent rental payments exist for certain pieces of equipment and are not significant compared with total rental
payments. These are based on excess wear and tear and excess use. See Note 33 for more information.
_______________________________________________________________________________________
91
91
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
27. CONTINGENT LIABILITIES
BOART LONGYEAR LIMITED
The recognition of provisions for legal disputes is subject to a significant degree of judgment. Provisions are established
when (a) the Company has a present legal or constructive obligation as a result of past events, (b) it is probable that an
outflow of resources will be required to settle the obligation, and (c) the amount of that outflow has been reliably
estimated.
Letters of credit
Standby letters of credit primarily issued in support of commitments or other obligations as at 31 December 2018 are as
follows:
Subsidiary
Australia
Australia
Australia
United States
United States
United States
United States
Purpose
Secure credit facility
Secure a facility rental
Secure a facility rental
Secure workers compensation program
Secure a performance bond
Secure insurance program
Secure DS bonding program
Expiration
Date
May 2019
August 2019
September 2019
January 2019
June 2019
August 2019
January 2019
Amount
US $'000
352
523
558
100
606
1,050
2,670
5,859
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the
amount recognised as a provision or the amount initially recognised less cumulative amortisation in accordance with the
revenue recognition policies described in Note 3.
A summary of the maturity of issued letters of credit is as follows:
Less than 1 year
Guarantees
2018
US$'000
5,859
2017
US$'000
12,993
The subsidiaries of the Company provide guarantees within the normal course of business which includes payment
guarantees to cover import duties, taxes, performance and completion of contracts. In addition, the Parent and certain
subsidiaries are guarantors on the Company’s loans and borrowings. See Note 21.
Legal contingencies
The Company is subject to certain routine legal proceedings that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate
outcome of any litigation is uncertain, and unfavourable outcomes could have a material adverse impact.
Tax and customs audits
The Company is subject to certain tax and customs audits that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending assessments (either alone or combined) would not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate
outcome of these audits is uncertain and unfavourable outcomes could have a material adverse impact. See additional
disclosure in Note 11.
_______________________________________________________________________________________
92
BOART LONGYEAR 2018 ANNUAL REPORT
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
27. CONTINGENT LIABILITIES (CONTINUED)
Other contingencies
BOART LONGYEAR LIMITED
Other contingent liabilities as at 31 December 2018 and 2017 consist of the following:
Contingent liabilities
Guarantees/counter-guarantees to outside parties
2,079
2,717
2018
US$'000
2017
US$'000
Except as detailed in the following table, the carrying amount of financial assets recorded in the financial statements, net
of any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of the
value of any collateral obtained. See Note 15.
Financial assets and other credit exposure
Performance guarantees provided, including letters of credit
Maximum credit risk
2018
2017
US$'000
US$'000
7,938
15,710
_______________________________________________________________________________________
93
93
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
28. PARENT ENTITY DISCLOSURES
Financial position
BOART LONGYEAR LIMITED
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss
2018
US$'000
2017
US$'000
15,087
491,119
506,206
58,639
389,343
447,982
58,224
485,469
-
485,469
64,525
310,491
375,016
110,453
3,219,236
9,538
(3,170,550)
58,224
3,219,218
4,523
(3,113,288)
110,453
2018
US$'000
2017
US$'000
(37,441)
-
(37,441)
(51,368)
-
(51,368)
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
Other guarantees are described in Note 27.
Contractual obligations
As at 31 December 2018 and 2017, Boart Longyear Limited did not have any contractual obligations.
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
The Parent has entered into agreements with the Canada Revenue Agency and Ministry of Finance for the province of
Ontario to guarantee the payment of all amounts finally determined to be due and payable by its Canadian affiliates in
respect of contested tax assessments for the tax years from 2007 through 2012. See Note 11. Other guarantees are
described in Note 27.
_______________________________________________________________________________________
94
BOART LONGYEAR 2018 ANNUAL REPORT
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
29. COMPANY SUBSIDIARIES
The Company’s percentage ownership of the principal subsidiaries are as follows:
Subsidiaries
A.C.N. 066 301 531 Pty Ltd1
Aqua Drilling & Grouting Pty Ltd.1
BL Capital Management LLC3
BL DDL Holdings Pty Ltd
BL DDL II Holdings Pty Ltd
BL DDL NY Holdings Inc.1
BLI Zambia Ltd.
BLY Cote d'Ivoire S.A.
BLY EMEA UK Holdings Ltd.
BLY Gabon S.A.
BLY Ghana Limited
BLY Guinea S.A.2
BLY IP Inc.
BLY Madagascar S.A.2
BLY Mali S.A.
BLY Senegal S.A.
BLY Sierra Leone Ltd.
BLY US Holdings Inc.3
Boart Longyear (Cambodia) Ltd.2
Boart Longyear (DRC) S.A.
Boart Longyear (NZ) Limited
Boart Longyear (Vic) No. 1 Pty Ltd
Boart Longyear (Vic) No. 2 Pty Ltd
Boart Longyear Alberta Limited
Boart Longyear Argentina S.A.
Boart Longyear Australia Holdings Pty Limited
Boart Longyear Australia Pty Ltd
Boart Longyear Burkina Faso Sarl2
Boart Longyear B.V.
Boart Longyear Canada
Boart Longyear Chile Limitada
Boart Longyear Colombia S.A.S.2
Boart Longyear Company
Boart Longyear Consolidated Holdings, Inc.
Boart Longyear de Mexico, S.A. de C.V.
BLY Drilling Services and Products Mexico, S.A. de C.V.2
Boart Longyear Drilling Products (Wuxi) Co., Ltd.
Boart Longyear Drilling Services KZ LLP
Boart Longyear Eritrea Ltd.
Boart Longyear Global Holdco, Inc
Boart Longyear GmbH & Co., KG
Boart Longyear Holdings (Thailand) Co., Ltd.
Boart Longyear International B.V.
Boart Longyear International Holdings, Inc.
Boart Longyear Investments Pty Ltd
Boart Longyear Liberia Corporation
Boart Longyear Limitada
Boart Longyear Limited
Boart Longyear Limited2
Country of
incorporation
Business
31 Dec
2018
31 Dec
2017
Dormant
Dormant
Holding Company
Holding Company
Holding Company
Holding Company
Drilling Services
Drilling Services
Holding Company
Drilling Services
Drilling Services
Dormant
Holding Company
Dormant
Drilling Services
Drilling Services
Drilling Services
Holding Company
Dormant
Australia
Australia
USA
Australia
Australia
USA
Zambia
Ivory Coast
United Kingdom
Gabon
Ghana
Guinea
USA
Madagascar
Mali
Senegal
Sierra Leone
USA
Cambodia
Dem. Rep. of Congo Drilling Services
Drilling Services
New Zealand
Holding Company
Australia
Holding Company
Australia
Holding Company
Canada
Drilling Services
Argentina
Holding Company
Australia
Drilling Services
Australia
Drilling Services
Burkina Faso
Drilling Products
Netherlands
Drilling Products and Services
Canada
Drilling Products and Services
Chile
Dormant
Colombia
Drilling Products and Services
USA
Holding Company
USA
Drilling Services
Mexico
Dormant
Mexico
Drilling Products and Services
China
Drilling Services
Kazakhstan
Drilling Services
Eritrea
Holding Company
USA
Drilling Products and Services
Germany
Drilling Services
Thailand
Holding Company
Netherlands
Holding Company
USA
Holding Company
Australia
Drilling Services
Liberia
Drilling Products
Brazil
Drilling Products
Ireland
Drilling Services
Thailand
-
-
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2018
29. COMPANY SUBSIDIARIES (CONTINUED)
Subsidiaries
Boart Longyear LLC
Boart Longyear Management Pty Ltd
Boart Longyear Manufacturing Canada Ltd.
Boart Longyear Manufacturing and Distribution Inc.
Boart Longyear Netherlands BV
Boart Longyear Poland Spolka Z.o.o.
Boart Longyear Products KZ LLP
Boart Longyear RUS
Boart Longyear S.A.C.
Boart Longyear Saudi Arabia LLC2
Boart Longyear Sole Co., Limited
Boart Longyear Suisse Sàrl
Boart Longyear Ventures Inc.
Boart Longyear Vermogensverwaltung GmbH
Boart Longyear Zambia Limited
Cooperatief Longyear Holdings UA
Dongray Industrial Limited2
Drillcorp Pty Ltd2
Geoserv Pesquisas Geologicas S.A.
Globaltech Corporation Pty Ltd4
Grimwood Davies Pty Ltd1
Inavel S.A.
Longyear Canada, ULC
Longyear Global Holdings, Inc.
Longyear Holdings New Zealand, Ltd2
Longyear Holdings, Inc.
Longyear South Africa (Pty) Ltd
Longyear TM, Inc.
North West Drilling Pty Limited
P.T. Boart Longyear
Patagonia Drill Mining Services S.A.
Prosonic Corporation1
Resources Services Holdco, Inc
Votraint No. 1609 Pty Ltd
(1) This entity was merged or dissolved in 2018
(2) This entity is currently in liquidation status
(3) This entity was formed in 2018
(4) Boart Longyear became a majority shareholder in 2018
Country of
incorporation
Russia Federation
Australia
Canada
USA
Netherlands
Poland
Kazakhstan
Russia Federation
Peru
Saudi Arabia
Laos
Switzerland
Canada
Germany
Zambia
Netherlands
United Kingdom
Australia
Brazil
Australia
Australia
Uruguay
Canada
USA
New Zealand
USA
South Africa
USA
Australia
Indonesia
Argentina
USA
USA
Australia
Business
31 Dec
2018
31 Dec
2017
Drilling Products
Holding Company
Drilling Products
Drilling Products
Holding Company
Drilling Products and Services
Drilling Products
Drilling Services
Drilling Products and Services
Dormant
Drilling Services
Holding Company
Holding Company
Holding Company
Drilling Products
Holding Company
Dormant
Dormant
Drilling Services
Holding Company
Dormant
Drilling Services
Drilling Products
Holding Company
Dormant
Holding Company
Drilling Products and Services
Holding Company
Dormant
Drilling Services
Drilling Services
Dormant
Holding Company
Drilling Services
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
52
-
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BOART LONGYEAR 2018 ANNUAL REPORT
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
30. RELATED PARTY TRANSACTIONS
Transactions with key management personnel
(i)
Key management personnel compensation
BOART LONGYEAR LIMITED
Details of key management personnel compensation are disclosed in Note 9.
(ii)
Other transactions with key management personnel of the Company
None.
(iii)
During the year the Company incurred the following interest expenses associated with the relevant parties
and corresponding debt facilities:
Balances at
Interest expense for the
financial year ended
31 Dec 2018
31 Dec 2018
US$'000
US$'000
Centerbridge
Term Loan A
Term Loan B
Backstop ABL
Senior Secured Notes
Backstop ABL
Senior Secured Notes
Unsecured Notes
Ascribe
132,597
159,845
14,239
21,612
4,994
59,853
41,258
14,010
16,860
1,491
1,353
523
6,584
613
_______________________________________________________________________________________
97
97
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
31. CASH AND CASH EQUIVALENTS
BOART LONGYEAR LIMITED
Included in the cash balance at 31 December 2018 is $1.6 million of restricted cash and at 31 December 2017 $5.8 million
of restricted cash. The Company cannot access these cash balances until certain conditions are met. These conditions
pertain to the Company’s ABL facility as well as restrictions to secure facility leases.
32. NON-CASH TRANSACTIONS
During the current year, the Company entered into the following non-cash financing activities, which are not reflected in
the consolidated statement of cash flows:
•
•
$65.6 million of non-cash interest expense;
$292.4 million Term Loan A and B changed issuers within the Group.
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
The Company has adopted all of the new and revised standards and interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period.
These standards and interpretations are set forth throughout the notes to the financial statements. The adoption of each
standard individually did not have a significant impact on the Company’s financial results or consolidated statement of
financial position.
Standards and Interpretations issued and effective
Standard / Interpretation
AASB 15 'Revenue from Contracts
w ith Customers'
Effective for annual reporting
periods beginning on or after
Expected to be initially applied
in the financial year ending
1 January 2018
31 December 2018
AASB 9 'Financial Instruments'
1 January 2018
31 December 2018
AASB 15 – Revenue from Contracts with Customers
In the current year, the Company has applied AASB 15 Revenue from Contracts with Customers (as amended in April
2016) which has come into effect 1 January 2018. AASB 15 establishes a comprehensive framework for determining the
timing and quantum of revenue recognised. It replaces existing guidance, including AASB 118 Revenue and AASB 111
Construction Contracts. The core principle of AASB 15 is that an entity shall recognise revenue when control of a good or
service transfers to a customer.
The Company adopted AASB 15 using the modified transition approach to implementation, which allows any transition
adjustments to be recognised in retained earnings at 1 January 2018. The comparative financial statements are not
restated. AASB 15 was only applied to contracts that were not completed at 1 January 2018.
There have been no material adjustments made to the financial statements on adoption of AASB 15, and therefore, there
are no adjustments to retained earnings at 1 January 2018.
See Note 3 Revenue for further information.
_______________________________________________________________________________________
98
BOART LONGYEAR 2018 ANNUAL REPORT
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
AASB 9 – Financial Instruments
In the current year, the Company has applied AASB 9 Financial Instruments (as revised in July 2014) and the related
consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1
January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. Additionally, the Company
adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for
2018 and to the comparative period.
AASB 9 introduced new requirements for:
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
3) General hedge accounting.
The Company has applied AASB 9 in accordance with the transition provisions set out in AASB 9 and has concluded that
there are no material adjustments to the financial statements.
(a) Classification and measurement of financial assets
The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and
financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Company has applied
the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied
the requirements to instruments that have already been derecognised as at 1 January 2018. There were no
restatements to comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018.
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets.
Specifically:
•
•
•
•
•
debt instruments that are held within a business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely payments of principal and interest on the principal
amount outstanding, are measured subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual
cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, are measured subsequently at fair value through
other comprehensive income (FVTOCI);
all other debt investments and equity investments are measured subsequently at fair value through profit or
loss (FVTPL). Despite the foregoing, the Company may make the following irrevocable election/designation
at initial recognition of a financial asset;
the Company may irrevocably elect to present subsequent changes in fair value of an equity investment that
is neither held for trading nor contingent consideration recognised by an acquirer in a business combination
in other comprehensive income; and
the Company may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria
as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI
criteria as measured at FVTPL.
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an
equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is subsequently transferred to retained earnings.
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
below.
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1 January
2018 based on the facts and circumstances that existed at that date and concluded that the initial application of
_______________________________________________________________________________________
99
99
BOART LONGYEAR 2018 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
BOART LONGYEAR LIMITED
BOART LONGYEAR LIMITED
AASB 9 – Financial Instruments
AASB 9 has had the following impact on the Group’s financial assets as regards their classification and
measurement:
In the current year, the Company has applied AASB 9 Financial Instruments (as revised in July 2014) and the related
consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1
financial assets classified as held-to-maturity and loans and receivables under AASB 39 that were measured
January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. Additionally, the Company
at amortised cost continue to be measured at amortised cost under AASB 9 as they are held within
adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for
a business model to collect contractual cash flows and these cash flows consist solely of payments of
2018 and to the comparative period.
principal and interest on the principal amount outstanding.
•
AASB 9 introduced new requirements for:
None of the other reclassifications of financial assets have had any impact on the Group’s financial position, profit or
loss, other comprehensive income or total comprehensive income in either year.
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
Impairment of financial assets
3) General hedge accounting.
(b)
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an
The Company has applied AASB 9 in accordance with the transition provisions set out in AASB 9 and has concluded that
incurred credit loss model under AASB 39. The expected credit loss model requires the Company to account for
there are no material adjustments to the financial statements.
expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit
risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have
(a) Classification and measurement of financial assets
occurred before credit losses are recognised.
The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and
financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Company has applied
Specifically, AASB 9 requires the Company to recognise a loss allowance for expected credit losses on:
the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied
the requirements to instruments that have already been derecognised as at 1 January 2018. There were no
(1) Debt investments measured subsequently at amortised cost or at FVTOCI;
restatements to comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018.
(2) Lease receivables;
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
(3) Trade receivables and contract assets; and
contractual cash flow characteristics of the financial assets.
(4) Financial guarantee contracts to which the impairment requirements of AASB 9 apply.
Specifically:
•
•
In particular, AASB 9 requires the Company to measure the loss allowance for a financial instrument at an amount
debt instruments that are held within a business model whose objective is to collect the contractual cash
equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased
flows, and that have contractual cash flows that are solely payments of principal and interest on the principal
significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial
amount outstanding, are measured subsequently at amortised cost;
asset. However, if the credit risk on a financial instrument has not increased significantly since initial recognition
debt instruments that are held within a business model whose objective is both to collect the contractual
(except for a purchased or originated credit-impaired financial asset), the Company is required to measure the loss
cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of
allowance for that financial instrument at an amount equal to 12-months ECL. AASB 9 also requires a simplified
principal and interest on the principal amount outstanding, are measured subsequently at fair value through
approach for measuring the loss allowance at an amount equal to lifetime ECL for trade receivables, contract assets
other comprehensive income (FVTOCI);
and lease receivables in certain circumstances.
all other debt investments and equity investments are measured subsequently at fair value through profit or
loss (FVTPL). Despite the foregoing, the Company may make the following irrevocable election/designation
at initial recognition of a financial asset;
the Company may irrevocably elect to present subsequent changes in fair value of an equity investment that
is neither held for trading nor contingent consideration recognised by an acquirer in a business combination
in other comprehensive income; and
Note
the Company may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria
as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
Items existing as at 1 Jan 2018
that are subject to the
impairment provisions of AASB 9
Credit risk attributes at
1 Jan 2017 and 1 Jan 2018
•
•
•
The result of the assessment is as follows:
In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI
criteria as measured at FVTPL.
Trade and other receivables
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an
equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is subsequently transferred to retained earnings.
The Company applies the simplified approach
and recogonises lifetime ECL for these assets.
No impairment on finance lease due to
existence of collateral.
13
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
Cash and bank balances
below.
21
All bank balances are assessed to have low
credit risk at each reporting date as they are
held with reputable international banking
institutions.
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1 January
2018 based on the facts and circumstances that existed at that date and concluded that the initial application of
_______________________________________________________________________________________
_______________________________________________________________________________________
99
100
BOART LONGYEAR 2018 ANNUAL REPORT
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
BOART LONGYEAR LIMITED
BOART LONGYEAR LIMITED
Standards and Interpretations issued not yet effective
AASB 9 – Financial Instruments
The accounting standards and AASB Interpretations that will be applicable to the Company and may have an effect in
In the current year, the Company has applied AASB 9 Financial Instruments (as revised in July 2014) and the related
future reporting periods are detailed below. Apart from these standards and interpretations, management has considered
consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1
other accounting standards that will be applicable in future periods.
January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. Additionally, the Company
adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for
Effective for annual reporting
2018 and to the comparative period.
periods beginning on or after
Expected to be initially applied
in the financial year ending
Standard / Interpretation
AASB 9 introduced new requirements for:
AASB 16 'Leases'
1 January 2019
31 December 2019
Intrepretation 23 'Uncertainty over
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
Income Tax Treatments'
3) General hedge accounting.
1 January 2019
31 December 2019
AASB 16 – Leases
The Company has applied AASB 9 in accordance with the transition provisions set out in AASB 9 and has concluded that
there are no material adjustments to the financial statements.
General impact of application of IFRS 16 Leases
(a) Classification and measurement of financial assets
AASB 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial
statements for both lessors and lessees. AASB 16 will supersede the current lease guidance including IAS 17 Leases and
The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and
the related Interpretations when it becomes effective for accounting periods beginning on or after 1 January 2019. The
financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Company has applied
date of initial application of AASB 16 for the Company will be 1 January 2019.
the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied
the requirements to instruments that have already been derecognised as at 1 January 2018. There were no
The Company has chosen the modified retrospective application of AASB 16 in accordance with AASB 16:C8(a).
restatements to comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018.
Consequently, the Company will not restate the comparative information.
In contrast to lessee accounting, AASB 16 substantially carries forward the lessor accounting requirements in IAS 17.
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets.
Impact of the new definition of a lease
•
•
•
•
Specifically:
The Company will make use of the practical expedient available on transition to AASB 16 not to reassess whether a
contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue
to apply to those leases entered or modified before 1 January 2019.
The right to obtain substantially all of the economic benefits from the use of an identified asset; and
The right to direct the use of that asset.
•
The change in definition of a lease mainly relates to the concept of control. AASB 16 distinguishes between leases and
service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is
considered to exist if the customer has:
debt instruments that are held within a business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely payments of principal and interest on the principal
amount outstanding, are measured subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual
cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, are measured subsequently at fair value through
other comprehensive income (FVTOCI);
all other debt investments and equity investments are measured subsequently at fair value through profit or
loss (FVTPL). Despite the foregoing, the Company may make the following irrevocable election/designation
The Company will apply the definition of a lease and related guidance set out in AASB 16 to all lease contracts entered
at initial recognition of a financial asset;
into or modified on or after 1 January 2019 (whether it is a lessor or a lessee in the lease contract). In preparation for the
first‑time application of AASB 16, the Company has carried out an implementation project. The project has shown that the
the Company may irrevocably elect to present subsequent changes in fair value of an equity investment that
is neither held for trading nor contingent consideration recognised by an acquirer in a business combination
new definition in AASB 16 will not change significantly the scope of contracts that meet the definition of a lease for the
in other comprehensive income; and
Company.
•
the Company may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria
as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
Impact on Lessee Accounting
•
Operating leases
In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI
criteria as measured at FVTPL.
AASB 16 will change how the Company accounts for leases previously classified as operating leases under IAS 17, which
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in
were off‑balance sheet.
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an
equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is subsequently transferred to retained earnings.
a) Recognize right‑of‑use assets and lease liabilities in the consolidated statement of financial position, initially
On initial application of AASB 16, for all leases (except as noted below), the Company will:
measured at the present value of the future lease payments;
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
b) Recognize depreciation of right‑of‑use assets and interest on lease liabilities in the consolidated statement of
below.
profit or loss;
c) Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1 January
2018 based on the facts and circumstances that existed at that date and concluded that the initial application of
(presented within operating activities) in the consolidated cash flow statement.
_______________________________________________________________________________________
_______________________________________________________________________________________
99
101
BOART LONGYEAR 2018 ANNUAL REPORT
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
BOART LONGYEAR LIMITED
BOART LONGYEAR LIMITED
Lease incentives (e.g. rent‑free period) will be recognized as part of the measurement of the right‑of‑use assets and
AASB 9 – Financial Instruments
lease liabilities whereas under IAS 17 they resulted in the recognition of a lease liability incentive, amortized as a
reduction of rental expenses on a straight‑line basis.
In the current year, the Company has applied AASB 9 Financial Instruments (as revised in July 2014) and the related
consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1
January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. Additionally, the Company
Under AASB 16, right‑of‑use assets will be tested for impairment in accordance with IAS 36 Impairment of Assets. This
adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for
will replace the previous requirement to recognize a provision for onerous lease contracts.
2018 and to the comparative period.
For short‑term leases (lease term of 12 months or less) and leases of low‑value assets (such as personal computers and
AASB 9 introduced new requirements for:
office furniture), the Company will opt to recognize a lease expense on a straight‑line basis as permitted by AASB 16.
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
3) General hedge accounting.
As at 31 December 2018, the Company has non‑cancellable operating lease commitments of $44.7 million. A preliminary
assessment indicates that $10.7 million of these arrangements relate to leases other than short‑term leases and leases of
low‑value assets, and hence the Company will recognize a right‑of‑use asset and a corresponding lease liability of $32.4
million in respect of all these leases. The impact on profit or loss is to decrease rent expenses by $12.2 million, to
The Company has applied AASB 9 in accordance with the transition provisions set out in AASB 9 and has concluded that
increase depreciation by $9.6 million, and to increase interest expense by $2.4 million. The provision for onerous lease
there are no material adjustments to the financial statements.
contracts which was required under AASB 117 of $0.3 million will be derecognized.
(a) Classification and measurement of financial assets
Under AASB 117, all lease payments on operating leases are presented as part of cash flows from operating activities.
The impact of the changes under AASB 16 would be to reduce the cash generated by operating activities by $3.7 million
The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and
and to increase net cash used in financing activities by the same amount.
financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Company has applied
the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied
The Company will make use of the practical expedient to not separate non-lease and lease components (AASB16.15).
the requirements to instruments that have already been derecognised as at 1 January 2018. There were no
restatements to comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018.
Finance leases
•
•
Specifically:
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at
The main differences between AASB 16 and AASB 117 with respect to assets formerly held under a finance lease is the
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
measurement of the residual value guarantees provided by the lessee to the lessor. AASB 16 requires that the Company
contractual cash flow characteristics of the financial assets.
recognizes as part of its lease liability only the amount expected to be payable under a residual value guarantee, rather
than the maximum amount guaranteed as required by AASB 117. On initial application, the Company will present
equipment previously included in property, plant and equipment within the line item for right‑of‑use assets and the lease
liability, previously presented within borrowing, will be presented in a separate line for lease liabilities.
Based on an analysis of the Company’s finance leases as at 31 December 2018 on the basis of the facts and
circumstances that exist at that date, the directors of the Company have assessed that the impact of this change will not
have an impact on the amounts recognized in the Company’s consolidated financial statements.
debt instruments that are held within a business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely payments of principal and interest on the principal
amount outstanding, are measured subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual
cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, are measured subsequently at fair value through
other comprehensive income (FVTOCI);
all other debt investments and equity investments are measured subsequently at fair value through profit or
Under AASB 16, a lessor continues to classify leases as either finance leases or operating leases and account for those
loss (FVTPL). Despite the foregoing, the Company may make the following irrevocable election/designation
two types of leases differently. However, AASB 16 has changed and expanded the disclosures required, in particular
at initial recognition of a financial asset;
regarding how a lessor manages the risks arising from its residual interest in leased assets.
the Company may irrevocably elect to present subsequent changes in fair value of an equity investment that
is neither held for trading nor contingent consideration recognised by an acquirer in a business combination
in other comprehensive income; and
the Company may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria
as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
Under AASB 16, an intermediate lessor accounts for the head lease and the sublease as two separate contracts. The
intermediate lessor is required to classify the sublease as a finance or operating lease by reference to the right‑of‑use
asset arising from the head lease (and not by reference to the underlying asset as was the case under AASB 117).
Impact on Lessor Accounting
•
•
•
Because of this change the Company will reclassify certain of its sublease agreements as finance leases. As required by
In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI
AASB 9, an allowance for expected credit losses will be recognized on the finance lease receivables. The leased assets
criteria as measured at FVTPL.
will be derecognized, and finance lease asset receivables recognized. This change in accounting will change the timing of
recognition of the related revenue (recognized in finance income).
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an
equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is subsequently transferred to retained earnings.
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
below.
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1 January
2018 based on the facts and circumstances that existed at that date and concluded that the initial application of
_______________________________________________________________________________________
_______________________________________________________________________________________
99
102
BOART LONGYEAR 2018 ANNUAL REPORT
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
33. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
BOART LONGYEAR LIMITED
BOART LONGYEAR LIMITED
Interpretation 23 Uncertainty over Income Tax Treatments
AASB 9 – Financial Instruments
In the current year, the Company has applied AASB 9 Financial Instruments (as revised in July 2014) and the related
Interpretation 23 sets out how to determine the accounting tax position when there is uncertainty over income tax
consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1
treatments. The Interpretation requires an entity to:
January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. Additionally, the Company
determine whether uncertain tax positions are assessed separately or as a group; and
adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for
assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be
2018 and to the comparative period.
used, by an entity in its income tax filings:
•
•
o
o
AASB 9 introduced new requirements for:
If yes, the entity should determine its accounting tax position consistently with the tax treatment used or
planned to be used in its income tax filings.
If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
3) General hedge accounting.
The Interpretation is effective for annual periods beginning on or after 1 January 2019. Entities can apply the
Interpretation with either full retrospective application or modified retrospective application without restatement of
comparatives retrospectively or prospectively.
The Company has applied AASB 9 in accordance with the transition provisions set out in AASB 9 and has concluded that
there are no material adjustments to the financial statements.
The directors of the Company do not anticipate that the application of the amendments in the future will have an impact on
the Company’s consolidated financial statements.
(a) Classification and measurement of financial assets
34. ACQUISITION OF OPERATIONS
The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and
financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Company has applied
On 1 July 2018 the Boart Longyear Company acquired an additional 11.9% of the issued share capital of Globaltech
the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied
Corporation Pty Ltd (“Globaltech”), increasing its shareholding to 51.7% and obtaining control of Globaltech. The direct
the requirements to instruments that have already been derecognised as at 1 January 2018. There were no
parent entity of Globaltech is Votraint No. 1609 Pty Ltd (“Votraint”). The goodwill arising on the acquisition of Globaltech is
restatements to comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018.
related to the designing, development and manufacturing of electronic instrumentation for drilling operations for the mining
industry.
All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table
below.
Specifically:
Fair Value
•
•
•
•
•
US$’000
277
1,813
Financial assets
Property, plant and equipment
Research & development assets
debt instruments that are held within a business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely payments of principal and interest on the principal
amount outstanding, are measured subsequently at amortised cost;
debt instruments that are held within a business model whose objective is both to collect the contractual
cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of
Current Tax Payable
principal and interest on the principal amount outstanding, are measured subsequently at fair value through
other comprehensive income (FVTOCI);
Deferred Tax Liability
all other debt investments and equity investments are measured subsequently at fair value through profit or
loss (FVTPL). Despite the foregoing, the Company may make the following irrevocable election/designation
at initial recognition of a financial asset;
the Company may irrevocably elect to present subsequent changes in fair value of an equity investment that
is neither held for trading nor contingent consideration recognised by an acquirer in a business combination
in other comprehensive income; and
the Company may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria
as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
Total identifiable assets
Financial liabilities
Total Assets
(922)
(785)
(2,358)
5,461
9,401
7,436
3,940
Boart Longyear 51.7% share
4,860
Goodwill
Satisfied by:
In the current year, the Company has not designated any debt investments that meet the amortised cost or FVTOCI
Converting loans and accrued interest to ordinary shares of
criteria as measured at FVTPL.
GlobalTech
4,860
Total consideration transferred
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. When an
equity investment designated as measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is subsequently transferred to retained earnings.
4,860
The fair value of the financial assets includes trade receivables with a fair value of $1.0 million.
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
below.
The goodwill of $3.9 million arising from the acquisition consists of the excess of the total consideration transferred and
Votraint’s share (51.7%) of the fair value of Globaltech’s net assets at acquisition date.
The directors of the Company reviewed and assessed the Group’s existing financial assets as at 1 January
2018 based on the facts and circumstances that existed at that date and concluded that the initial application of
The non-controlling interest (48.3%) recognised at the acquisition date was measured by reference to the non-controlling
share of the fair value of the net assets of Globaltech at acquisition date and amounted to $2.4 million.
_______________________________________________________________________________________
_______________________________________________________________________________________
99
103
BOART LONGYEAR 2018 ANNUAL REPORT
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2018
For the financial year ended 31 December 2018
BOART LONGYEAR LIMITED
35. SUBSEQUENT EVENTS
None.
_______________________________________________________________________________________
104
BOART LONGYEAR 2018 ANNUAL REPORT
104
SUPPLEMENTARY INFORMATION
SUPPLEMENTARY INFORMATION
Additional Information as at 18 March 2019
ADDITIONAL INFORMATION as at 19 March 2019.
Substantial shareholders
The substantial shareholders as disclosed to the Company in substantial holders’ notices are:
Holder
Number of Ordinary Shares in
which relevant interest held
Centerbridge Partners group of Companies
(as set out in Form 604: Notice of change of interests
of substantial holder lodged 17 October 2017) 13,368,237,284
Ascribe group of Companies
(as set out in Form 604: Notice of change of interests
of substantial holder lodged 27 September 2017)
Ares Management group of Companies
(as set out in Form 604: Notice of change of interests
of substantial holder lodged 28 February 2018)
5,497,572,395
2,235,152,952
(a) Ordinary share capital.
There are 26,296,215,464 fully paid ordinary shares on issue, held by 4,307 individual shareholders.
Each ordinary shareholder present at a general meeting (whether in person or by proxy or
representative) is entitled to one vote on a show of hands or, on a poll, one vote for each fully paid
ordinary share held.
(b) Share rights and share options
There are 27,828,976 unquoted share options held by 15 individual option holders. The share options do not carry
rights to vote.
There are 602,739,409 quoted share options that are publically traded on the ASX under reference “BLYO”. The
share options do not carry rights to vote.
Distribution of holders of equity securities
Range
Holders - Fully Paid
Ordinary Shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
483
389
177
1,025
2,233
4,307
The number of security investors holding less than a marketable parcel of 125,000
securities ($0.004 on 19/03/2019) is 2,241 and they hold 80,396,288 securities.
130
105
BOART LONGYEAR 2018 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
SUPPLEMENTARY INFORMATION
Additional Information as at 18 March 2019
TOP 20 HOLDERS
No. Holder
Fully Paid
Ordinary Shares
Percent of
Issued Capital Held
1 CCP II DUTCH ACQUISITION - E2, B.V.
2
ASCRIBE II INVESTMENTS LLC
3 CCP CREDIT SC II DUTCH ACQUISITION - E, B.V.
4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5
J P MORGAN NOMINEES AUSTRALIA LIMITED
6 CITICORP NOMINEES PTY LIMITED
7 MERRILL LYNCH (AUSTRALIA) NOMINEES LIMITED
8 CS THIRD NOMINEES PTY LIMITED
9 MS LINLIN LI
10 KEONG LIM PTY LIMITED
11 MR JZHONG-WEI MIAO
12 E-TECH CAPITAL PTY LTD
13 RUSSELL INVESTMENTS
14 MR JIMMY YIP
15 MR CHRISTOPHER STUART KING
16 MR GRAHAM JOHN ALMOND
17 RIADIS HOLDINGS PTY LTD
18 LEKON GLOBAL PTY LTD
19 TWYNAM AGRICULTURAL GROUP PTY LTD
20 MR SUNDER RAJ ESWARA + MRS KALAVATHY SUNDER RAJ
8,863,453,789
5,490,395,109
4,040,281,889
2,873,674,540
783,575,974
742,816,403
356,874,677
167,711,045
115,000,000
77,418,211
65,500,000
65,000,000
60,733,162
54,549,202
52,500,000
51,000,000
50,000,000
49,500,000
36,000,000
30,099,999
33.71
20.88
15.36
10.93
2.98
2.82
1.36
0.64
0.44
0.29
0.25
0.25
0.23
0.21
0.20
0.19
0.19
0.19
0.14
0.11
TOTAL FOR TOP 20
24,026,084,000
91.37
Boart Longyear Annual Report 2016
131
BOART LONGYEAR 2018 ANNUAL REPORT
106
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Listing
Boart Longyear Limited is listed on the
Australian Securities Exchange under the
symbol ‘BLY’
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney, New South Wales 2000
Tel: +61 1800 781 633
Website
www.boartlongyear.com
CORPORATE INFORMATION
Headquarters
Global Headquarters
2455 South 3600 West
West Valley City, UT 84119
United States of America
Tel: +1 801 972 6430
Fax: +1 801 977 3374
Registered Office
26 Butler Boulevard
Burbridge Business Park
Adelaide Airport, SA 5950
Tel: +61 8 8375 8375
Fax: +61 8 8375 8497
Auditors
Deloitte Touche Tohmatsu
Company Secretaries
Robert Closner
Phil Mackey
Shareholder Enquiries
Boart Longyear Investor Relations
2455 South 3600 West
West Valley City, UT 84119
United States of America
Australia: +61 8 8375 8300
Others: +1 801 952 8343
Email: ir@boartlongyear.com